Safeway Stores v. Suburban Foods

• Decision Date: 10 March 1955
• Docket Number: Civ. A. No. 1814.
• Citation: 130 F. Supp. 249
• Parties: SAFEWAY STORES, Incorporated, a Maryland Corporation, v. SUBURBAN FOODS, Incorporated, a Virginia Corporation.
• Court: U.S. District Court — Eastern District of Virginia

130 F. Supp. 249

SAFEWAY STORES, Incorporated, a Maryland Corporation, v. SUBURBAN FOODS, Incorporated, a Virginia Corporation.

Civ. A. No. 1814.

United States District Court, E. D. Virginia, Norfolk Division.

March 10, 1955.

Breeden, Howard & MacMillan, Norfolk, Va., and Garland Clarke, Washington, D. C., for plaintiff.

James G. Martin, and Kanter & Kanter, Norfolk, Va., for defendant.

BRYAN, District Judge.

"Saveway", adopted by the defendant in 1954 as a part of a trade name for a local retail self-service grocery at Norfolk, Virginia, is denounced by the plaintiff as an infringement of the trade name of "Safeway" which it has used continuously in Virginia since 1942, and elsewhere since 1926, to designate each of the cash-and-carry grocery stores in its national chain. Condemning it as unfair competition at common law, Safeway Stores, Incorporated, a Maryland corporation seeks to enjoin its continuance by Suburban Foods, Incorporated, a Virginia corporation. The defendant's threefold denial — of the existence of the requisite controversial amount to sustain diversity jurisdiction, of the exclusiveness of the plaintiff's right to the trade name, and of any infringement in fact or in law — make the issues to be resolved.

The defendant obtained its charter in 1953, immediately recorded the fictitious name of "Saveway Super Market", and commenced business in the spring of 1954. Though there is no Safeway store in Norfolk or the immediate area (the closest are in Richmond, Petersburg, Hopewell and West Point, Virginia) the defendant was well aware of the Safeway chain at the time it selected the name Saveway Super Market. It knew too that Saveway's business would be identical in character with Safeway's. At once the plaintiff protested but the defendant has refused to drop "Saveway".

In the store's overhead block-letter sign "Saveway" is emphasized by quotation marks. On billboards the word is written above, and in letters far larger than, the other parts of the name. So also in newspaper displays. The first syllable is sometimes accented, thus, "SAVEway", but always the two syllables are written together. Nearly all of its printed advertisements accentuate "Saveway", though the radio announcements repeat the full business name.

Safeway Stores, Incorporated, was chartered in Maryland in 1926. A corporation of the same name was then operating in California under a charter from that State. Maryland Safeway acquired California Safeway, as well as the stock of seven or eight other corporations, and continued as a holding company until 1943. The subsidiaries were engaged in the retail grocery business and nearly all of them traded as "Safeway". Their activities spread through California and other States of the West and Northwest. In 1928 Safeway acquired the Sanitary Grocery Company's chain of stores in Maryland, Virginia and the District of Columbia. By 1941 all of its stores bore the designation "Safeway" without further description. Beginning January 1, 1943 Safeway of Maryland, the plaintiff, absorbed all of the subsidiaries and became the sole corporate owner and operator of the stores.

"Safeway" evolved from a contest for the selection of a trade name conducted in 1924 by the plaintiff's California predecessor. Since then without break it has served as the plaintiff's insigne. For the last several years the corporation has been authorized to do business in every State; it actually operates stores in twenty-three States and the District of Columbia. Its Eastern stores are situated in New York (principally in the vicinity of New York City), New Jersey, Maryland, District of Columbia and Virginia, the last three comprising the Washington division; the other stores are in States west of the Mississippi River and in Canada.

There are 1,898 stores in the United States; 187 of them are in the Washington division and of these 71 are in Virginia. Richmond, 98 miles from Norfolk, has 18 stores, Petersburg, 79 miles from Norfolk, has 2, Hopewell, 74 miles away, has 1, and West Point, 65 miles distant, has 1; the remaining 49 are scattered throughout Virginia excepting the southwest section. Seasonally it buys large quantities of green produce from farmers about Norfolk.

In 1953 the national gross retail sales of Safeway exceeded a billion and a half dollars; in the Washington division they amounted to $176,116,274; and in Virginia $69,026,070. It was stipulated that the Virginia business had increased regularly during recent years.

The name "Safeway" has been, and is still, given widespread and extensive advertising. For 1953 alone the plaintiff spent in the United States more than 10 million dollars for this purpose. In the span from 1932 to 1953 money spent to publicize "Safeway" aggregated in excess of one hundred millions of dollars, not including the outlays in Canada. To the same end $669,726 in 1953, $594,447 in 1952, and $511,844 in 1951, with comparative sums for prior years, were expended in the Washington division.

Radio, newspaper, trade journals, consumers' magazines, highway billboards, leaflets, and bus cards are the principal advertising media. No Norfolk radio, newspaper, or billboard is used. The newspapers of Richmond and Washington, D. C., and the local papers of Virginia towns and counties, all carry advertisements of Safeway. In excess of a hundred radio stations throughout the United States put "Safeway" on the air. Fifteen or twenty broadcasts weekly come from Washington and Richmond alone. The name is also commercially televised from Washington. On the principal highways in Virginia, Maryland, and the District of Columbia, including the arterial roads leading in and out of Richmond, billboards proclaim "Safeway" to motorists and bus passengers. Only a small number of Richmond papers are sold in Norfolk, and radio and television programs beamed from Richmond and Washington, it is said, do not have large audiences in Norfolk.

Investors are familiar with the name. The preferred stock of the plaintiff is listed on the New York Stock Exchange under the name "Safeway". In March, 1954, there were at least 38,000 holders of the common and preferred stock, some in every State of the Union. Each shareholder periodically receives corporate notices and reports describing the business as "Safeway".

The fair and reasonable value of the good will of the plaintiff was fixed by the evidence at seventy-seven million dollars; its good will in Virginia in excess of three million. These figures appear to be just appraisals, made pursuant to recognized formulae; they are accepted by the Court as the plaintiff's good will values, of which "Safeway" is the heart.

I. These facts compel the conclusion that "Safeway" has a secondary meaning. To the eye and ear of food shoppers within the area of the plaintiff's activities, the name immediately carries a reference to a Safeway store; their minds at once associate it with the plaintiff's business. Obviously fictional and fanciful — an artificial combination — it is quite eligible as a trade name. The first to obtain its coinage and to build "Safeway" into a grocer's pseudonym,...