Scott and Fetzer Co. v. Dile, s. 79-3314
| Decision Date | 27 April 1981 |
| Docket Number | Nos. 79-3314,79-3740,s. 79-3314 |
| Citation | 643 F.2d 670 |
| Parties | , 8 Fed. R. Evid. Serv. 421 SCOTT AND FETZER COMPANY (the Kirby Company Division), Plaintiff-Appellee, v. Virgil L. DILE, Individually and Virgil L. Dile and Barbara Jolene Dile, husband and wife, dba Railroad Freight, Railroad Salvage and Discount Freight; and T.H.E. California Corporation, an Arizona Corporation, dba Railroad Freight, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
David N. Ramras, Phoenix, Ariz., for Dile.
Barry L. Springel, Cleveland, Ohio, on brief; Irving Berger, Jones, Day, Reavis & Pogue, Cleveland, Ohio, argued, for Scott & Fetzer Co.
Appeal from the United States District Court for the District of Arizona.
Before CHOY and REINHARDT, Circuit Judges, and KELLEHER, * District Judge.
This is a consolidated appeal from a preliminary injunction issued by the United States District Court and from a subsequent order finding appellant Virgil Dile in civil contempt. We reverse the issuance of the injunction, vacate the contempt judgment and remand for further proceedings.
Appellee Scott and Fetzer Company, the Kirby Company Division ("Kirby"), is engaged in the business of manufacturing and distributing electric vacuum cleaners and parts and accessories therefor. Appellant Virgil L. Dile ("Dile"), a resident of the State of Arizona has been engaged since 1965 or 1966, in the retail sale of various consumer products, both individually and through corporations owned or controlled by him. He has done business under various trade names.
Kirby sells its products to "authorized factory distributors" pursuant to written agreements which include a license to use Kirby's trademarks. Although there appears to be some dispute as to whether Dile was ever a factory authorized distributor of Kirby, he was not so authorized at all times relevant in this action.
Over the years Kirby has had written commitments with purchasers of vacuum cleaners to completely rebuild vacuum cleaners sold to them for a specified maximum fee, on condition that only the original purchasers request the rebuilding. It is not the company's policy to rebuild and sell any used Kirby vacuum cleaners.
Dile has been engaged in the retail sale of rebuilt vacuum cleaners bearing Kirby's trademark since 1971 or 1972. 1 This case arose from Dile's sale of these rebuilts and specifically from his advertising in connection with such sales.
Kirby brought suit against Dile alleging trademark infringement and unfair competition. The district court held a show cause hearing on March 21 and 22, 1979 on Kirby's request for a preliminary injunction. On April 13, 1979, the district court entered a preliminary injunction, part 3 of which required Dile to include in any advertising which used the word "Kirby" (a registered trademark owned by Kirby) a disclaimer of any affiliation with Kirby. 2 Dile appealed from the preliminary injunction.
On May 9, 1979, Kirby filed a motion in the district court to hold Dile in contempt for violating the disclaimer injunction. Kirby requested that as partial relief for the violation the district court bar any use of the word "Kirby" in Dile's advertising. The district court issued an order to show cause and held a hearing on the contempt motion on May 31, 1979.
On July 12, 1979, the district court entered an order in which it (a) held Dile in civil contempt, (b) ordered Dile to pay the expenses incurred by Kirby in the contempt proceeding, (c) ordered Dile to pay a fine of $500, and (d) ordered the cessation of all use of the word "Kirby" in any manner whatsoever in Dile's advertising.
On August 3, 1979, Dile filed a motion that the district court reconsider the July 12 order with respect to the contempt finding, the $500 fine, and the non-use injunction. On October 10, 1979, after reconsideration, the district court entered an order (a) affirming the contempt finding, (b) striking the $500 civil contempt fine, and (c) denying Dile's request to strike the non-use injunction. On November 8, 1979, Dile filed a notice of appeal from the October 10 order. 3 On January 17, 1980, this court consolidated this appeal with the appeal from the original preliminary injunction. 4
This action was commenced on March 18, 1978. The order to show cause hearing on Kirby's request for a preliminary injunction was not held until March 21, 1979. During this period of more than one year, extensive discovery took place.
At the order to show cause hearing Kirby called 23 witnesses in support of its claim. Twenty of the 23 witnesses were not listed as witnesses by Kirby in its answers to interrogatories. All 20 were permitted to testify over Dile's objection. In addition, of the 16 persons listed by Kirby as witnesses in the answers to interrogatories, Kirby called only three to testify at the hearing.
One of the undisclosed witnesses was an expert witness, John Lackner, a Kirby plant manager. His testimony concerned a Kirby rebuilt that was sold by Dile to an investigator hired by Kirby. He testified that a substantial number of components of the rebuilt were not genuine Kirby parts and as to the safety hazards posed by the examined machine. He was allowed to testify despite the fact that his name was not listed in response to an interrogatory which expressly asked whether any experts had been retained by Kirby. Two of the 20 witnesses not listed were process servers. Their testimony was not used by Kirby as part of its case in chief. One witness was the private investigator hired by Kirby. Other witnesses included persons who had purchased rebuilt Kirby vacuum cleaners from Dile believing them to be new Kirby products.
Kirby also offered 51 exhibits in support of its claim. Twenty-six of the 51 exhibits were not listed as exhibits in Kirby's answers to interrogatories. All of the exhibits were received over Dile's objection.
Dile argues that the district court abused its discretion by permitting Kirby, over objection to call the 20 witnesses to testify at trial and to introduce the 26 exhibits when notice of their identity and intention to use them was first given after trial began and when the witnesses and exhibits were not listed in response to interrogatories. We agree. These actions by the district judge denied Dile his right to prepare effective cross-examination and to present rebuttal witnesses and exhibits. We note that the need for preparation for effective cross-examination is even more compelling where expert testimony is involved.
In addition it appears that Kirby used these undisclosed witnesses and exhibits to support a previously undisclosed theory of the case. Kirby's theory of the case, as shown in its answers to interrogatories, was that Dile committed trademark infringement and unfair competition by using the trademark "Kirby" in his advertising and by making various alleged misleading representations in his advertising and sales receipts. At the hearing Kirby first revealed a new theory of the case; that is, that Dile allegedly engaged in trademark infringement and unfair competition by retaining the trademark "Kirby" on the rebuilt vacuum cleaners where such rebuilt vacuum cleaners were not assembled in their entirety by Kirby with "genuine" Kirby parts (manufactured by or for Kirby). In addition, at the hearing Kirby first raised an issue concerning the quality of Dile's rebuilt Kirby vacuums apparently arguing that Dile's rebuilt Kirby vacuums were inferior to Kirby's new vacuums and, thus, by retaining the "Kirby" trademark on such rebuilt vacuums Dile was injuring Kirby's good name and reputation.
The Supreme Court has noted that Rules 26 to 37, the discovery-deposition provisions of the Federal Rules, were intended to insure "proper litigation", Hickman v. Taylor, 329 U.S. 495, 507, 67 S.Ct. 385, 392, 91 L.Ed. 451 (1947), by making the "trial less a game of blindman's buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent." United States v. Procter & Gamble Co., 356 U.S. 677, 682, 78 S.Ct. 983, 986, 2 L.Ed. 1077 (1958).
Goldman v. Checker Taxi Co., 325 F.2d 853, 855 (7th Cir. 1963). Rule 26(e) of the Federal Rules of Civil Procedure specifically requires supplementation of responses to interrogatories. The rule states in relevant part:
(e) Supplementation of Responses. A party who has responded to a request for discovery with a response that was complete when made is under no duty to supplement his response to include information thereafter acquired, except as follows:
(1) A party is under a duty seasonably to supplement his response with respect to any question directly addressed to (A) the identity and location of persons having knowledge of discoverable matters, and (B) the identity of each person expected to be called as an expert witness at trial, the subject matter on which he is expected to testify, and the substance of his testimony.
Kirby explains its failure to supplement by maintaining that it was not until shortly before the March order to show cause hearing that it discovered the trademark infringement and unfair competition associated with the rebuilt vacuums. By a letter to Dile's counsel dated March 8, 1979 (which was read into the record), Kirby offered to supplement its prior interrogatory answers to identify the witnesses and exhibits it intended to use at trial. Since Kirby had made a request for supplementation to Dile, Kirby's offer to supplement was predicated on a simultaneous supplementation. 5 Dile never responded to this letter and Kirby claims that if he had he would have received the information that disclosed Kirby's position with respect to the rebuilts. This letter indicated nothing about a new theory in the case, however, and furthermore Rule 26(e) of...
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