Puma v. Wal-Mart Stores E., LP
| Court | Court of Appeals of New Mexico |
| Decision Date | 09 August 2022 |
| Docket Number | A-1-CA-38023 |
| Parties | BRUCE PUMA and KATHLEEN PUMA, for Themselves and All Others Similarly Situated, Plaintiffs-Appellees/Cross-Appellants, v. WAL-MART STORES EAST, LP; APPLICA CONSUMER PRODUCTS, INC.; and THE BLACK & DECKER CORPORATION, Defendants-Appellants/Cross-Appellees. |
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY C. Shannon Bacon, District Judge.
Floyd D. Wilson, P.C. Floyd D. Wilson, Cedar Crest, NM
Freedman Boyd Hollander Goldberg Urias & Ward, P.A. David A. Freedman Christopher A. Dodd Albuquerque, NM for Appellee
Holland & Hart LLP Larry J. Montaño Santa Fe, NM
Modrall, Sperling, Roehl, Harris & Sisk, P.A. Jennifer G Anderson Albuquerque, NM
Mitchell, Silberberg & Knupp LLP Jeffrey Richardson Gilbert S. Lee Los Angeles, CA for Appellants
McCoy Leavitt Laskey LLC H. Brook Laskey Albuquerque, NM
Goldberg Segalla LLP Laura A. Colca Buffalo, NY for Amicus Curiae Society of Product Licensors Committed to Excellence
{¶1} This appeal and cross-appeal arise in response to the district court's decisions relating to Bruce and Kathleen Puma's (the Pumas) claim that Wal-Mart Stores East LP, Applica Consumers Products, Inc., and The Black & Decker Corporation (collectively, Defendants) violated the Unfair Practices Act (the UPA), NMSA 1978, §§ 57-12-1 to -26 (1967, as amended through 2019). The parties argue whether the district court correctly determined or erred in (1) concluding that Defendants violated the UPA; (2) denying the Pumas damages based on unjust enrichment; and (3) awarding the Pumas certain attorney fees. We affirm in part and reverse in part.
{¶2} This case arises from the Pumas' purchase of a Black & Decker Corporation (Black & Decker) branded CM1050 B coffeemaker (the Coffeemaker) from a Wal-Mart store in Albuquerque, New Mexico in May 2013. At the time, Wal-Mart displayed models of various coffeemakers, including the Coffeemaker. Apart from its display model and box, Wal-Mart did not display any advertising for the Coffeemaker. The Pumas compared various coffeemakers, reviewing the boxes of various models, including the box in which the Coffeemaker was packaged. The Pumas also saw the display model of the Coffeemaker. Wording on both the Coffeemaker and its box stated it was a Black & Decker product. The Coffeemaker and its box also displayed the Black & Decker hexagon logo used at the time.
{¶3} The Pumas sought a reliable coffeemaker, and Mr. Puma had owned Black & Decker tools in the past without any concerns about quality. Black & Decker is a well-known company that has a reputation for producing well-built products for good value. Mr. Puma believed that the Coffeemaker was a Black & Decker product that he could purchase without any problems, Mrs. Puma believed the Coffeemaker was a better product than Wal-Mart's lower-priced store-brand coffeemaker, and the Pumas were willing to pay more for the Coffeemaker than the store-brand coffeemaker to the extent the Coffeemaker was a better, more reliable product. The Pumas paid $19.92 for the Coffeemaker, believing it was a Black & Decker product.
{¶4} Although Black & Decker has at all relevant times continued to produce and sell consumer products with the Black & Decker name and logos, Black & Decker did not design, manufacture, distribute, or warrant the Coffeemaker. Rather, the Coffeemaker was an Applica Consumers Products, Inc. (Applica) product. Applica and Black & Decker were parties to a trademark licensing agreement whereby Applica paid royalties to Black & Decker in exchange for Applica's ability to use the Black & Decker name and trademarks in the sale of small kitchen appliances, including the Coffeemaker. There is no corporate affiliation between Black & Decker and Applica, and a consumer reading the information on the Coffeemaker's box would not know of any relationship between Black & Decker and Applica.
{¶5} The Pumas sued Defendants, asserting various claims, including violations of the UPA based on the Coffeemaker's branding (the UPA name brand claim) and capacity (the 12-cup claim), unjust enrichment, and breach of duty on behalf of other individuals who bought the Coffeemaker. The district court certified a class defined to include persons who purchased the Coffeemaker at a New Mexico Wal-Mart store from 2009 to 2013, approximately 40,600 class members.
{¶6} Following a bench trial, the district court entered findings of fact and conclusions of law. As to the Pumas' UPA name brand claim, the district court concluded that Defendants' conduct constituted an "unfair or deceptive trade practice." The district court also concluded that, pursuant to the UPA, the Pumas were entitled to $300 in statutory damages and attorney fees, but because the class could not establish actual damages, it was not entitled to damages. With regard to the unjust enrichment claim, the district court concluded that, although the Pumas and class members had not received a Black & Decker product in purchasing the Coffeemaker, the Pumas were not entitled to damages for unjust enrichment because they had not met their burden of proof in establishing the amount of these damages.
{¶7} The Pumas moved for attorney fees and requested a lodestar amount representing the fees billed for the entire case and a 2.0 multiplier. After a hearing on the motion, the district court awarded a lodestar that represented a reduction of the amount requested by the Pumas, but that was not reduced as significantly as Defendants argued was appropriate. Further, the district court applied a multiplier of 1.5 to the lodestar.
{¶8} Defendants appeal and the Pumas cross-appeal.
{¶9} In their posttrial closing brief, Defendants argued that their use of the "Black & Decker" trademark on the Coffeemaker[2] did not constitute an unfair or deceptive trade practice under the UPA because the Trademark Act of 1946 (Lanham Act), 15 U.S.C. §§ 1051 to 1141n, which governs federal trademark law, countenanced their use of the trademark.
{¶10} Under the Lanham Act, registered trademarks may "be used legitimately by related companies." 15 U.S.C. § 1055. "Related companies" include "any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used." 15 U.S.C. § 1127. Defendants thus asserted that, under the Lanham Act, a trademark owner (here, Black & Decker) may grant a license and be protected as long as the trademark owner exercises quality control of the goods sold under its trademark by the licensee (here, Applica). Defendants thus contended that, under the Lanham Act, the ultimate source or manufacturer of a product need not be identified by a brand name as long as the trademark owner exercises sufficient oversight over the nature and quality of the goods sold under its licensed mark. Defendants argued that their collective use of the Black & Decker trademark comported with the Lanham Act because Black & Decker and Applica entered into a trademark licensing agreement that permitted Applica to market the Coffeemaker under the Black & Decker name and mandated that Black & Decker exercise control and oversight to ensure the Coffeemaker met Black & Decker's quality standard. In essence, Defendants argue that if the Lanham Act allows Applica to market the Coffeemaker, the arrangement cannot constitute a violation of the UPA. We disagree.
{¶11} Rejecting Defendants' contentions in this regard, the district court issued a letter stating that the Lanham Act did not apply in the context of a UPA claim. The district court then entered findings of fact and conclusions of law, ruling that Defendants' branding of the Coffeemaker constituted an unfair or deceptive trade practice under the UPA.
{¶12} On appeal, Defendants argue the district court committed legal error in arriving at its UPA branding decision without applying the Lanham Act. Because the district court's judgment arises from its misunderstanding of trademark law, Defendants argue, certain disputed findings of fact warrant no deference. See Hughes v. Hughes, 1978-NMSC-002, ¶ 52, 91 N.M. 339, 573 P.2d 1194 (" court's findings of fact, where based on an erroneous legal theory, are not binding on the appellate court."). Defendants also argue that their proposed findings of fact relating to Black & Decker's oversight of products Applica sold under its trademark should be deemed admitted, leaving us to decide only whether they are material. In sum, Defendants argue that we should apply Lanham Act precedent to reverse the district court's erroneous interpretation of trademark licensing agreements.
{¶13} We apply a de novo standard of review to determine whether the district court applied the correct legal standard. See Brooks v. Norwest Corp., 2004-NMCA-134, ¶ 7, 136 N.M. 599, 103 P.3d 39 (). To the extent Defendants' appeal requires us to interpret the UPA, our review is de novo. See Cates v. Mosher Enters Inc., 2017-NMCA-063, ¶ 14, 403 P.3d 687 (); Aguilera v. Palm Harbor Homes, Inc., 2004-NMCA-120, ¶ 6, 136 N.M. 422, 99 P.3d 672 ( ...
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