Sebastian Intern., Inc. v. Russolillo
| Decision Date | 03 July 2001 |
| Docket Number | No. CV-00-03476-CM(JWJx).,CV-00-03476-CM(JWJx). |
| Citation | 151 F.Supp.2d 1215 |
| Court | U.S. District Court — Central District of California |
| Parties | SEBASTIAN INTERNATIONAL, INC., Plaintiff, v. Vincenzo RUSSOLILLO, an individual, et al., Defendants, |
William C. Conkle, John A. Conkle, Eric S. Engel, Scott A. Hampton, Conkle & Olesten, Santa Monica, CA, Thomas J. Nolan, Joanne E. Caruso, Michael Turrill, Howery Simon Arnold & White, Los Angeles, CA, for Sebastian International Inc.
Norman H. Levine, Suann Macissac, Greenberg Glusker Fields Claman Machtinger & Kinsella, Los Angeles, CA, for Roger LAdd, Damian Christopher Inc.
J. Larson Jaenicke, Robert W. Hodges, Melodie Larsen, Rintala Smoot Janicke & Rees, Los Angeles, CA, for Quality King Distributors Inc., Med-X Corporation, Rite Aid Corporation, CVS Corp.
Jeffrey A. LeVee, Amy A. Stathos, Eric Patrick Enson, Jones Day Reavis & Pogue, Irvine, CA, for TSA Distributing Inc., Ken Teepe.
Eric Shih, Mark R. Bateman, Charles S. Barquist, Morrison & Foerster, Los Angeles, CA, for Phar-Mor Inc.
Steven M. Perry, Devon A. Gold, Munger Tolles & Olson, Los Angeles, CA, for Randalls Food Markets Inc.
Luis A. Carrillo, Luis A Carrillo Law Offices, Montebello, CA, Steven H. Hibbe, Miami, FL, for Trapeza Overseas Inc., Jose I. Arguelles.
Richard G. Simon, Richard G. Simon Law Offices, San Bernadino, CA, for Farshid Ben-Cohen.
Dennis G. Martin, Willmore F. Holbrow, III, Blakely Sokoloff Taylor & Zafman, Los Angeles, CA, Johon Emmett, John Emmett Law Offices, Dallas, TX, for Nortex Drug Distributors Inc.
Edmund J. Towle, III, Michael C. Denison, Towle Denison Smith & Tavera, Los Angeles, CA, for Tosvar Aerosol S.A.S. Paolo Gioia.
C-Zors Beauty, Santa Monica, CA, pro se.
Rickey G. Ivie, Ivie McNeil & Wyatt, Los Angeles, CA, for Cristina's Hair Design.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY ADJUDICATION AND DENYING DEFENDANTS' MOTIONS FOR SUMMARY ADJUDICATION
Presently before the Court are three motions for summary adjudication brought by Plaintiff Sebastian International, Defendant Damian Christopher Inc., ("DCI") and Defendant Quality King ("QK"). Having reviewed the papers, the evidence submitted in support thereto, and having heard oral argument on Monday June 25, 2001, the Court hereby grants Plaintiff's Motion and denies Defendants' Motions for the following reasons.1
On May 21, the parties filed their Motions for Summary Adjudication. There are very few applicable facts. Sebastian brand products include hairsprays, shampoos, conditioners, colorings, gels, mousse, and other hair treatments. Different codes are imprinted on Sebastian products, which are the lot or batch codes, date codes, holograms, and tracking codes. See Reidel Decl. at ¶ 23. The batch codes identify the product's manufacturer, the year and the month that the product was made, and the batch from which the container was filled. See Stoops Depo. Date codes indicate when the product was filled. Id.
Sebastian prefers to market its products through salons that agree to re-sell them only to consumers for their personal use. See Reidel Decl. at ¶¶ 6-7. To ensure Sebastian's products remain within this chain of commerce, the hologram codes are used to track products and prevent their diversion. Id. at ¶¶ 23-24. Sebastian has found its products for sale in grocery stores and drug stores in Southern California, with the hologram labels removed.
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A court may grant summary adjudication on specific issues without granting summary judgment as to the entire cause of action so as to narrow the issues for trial. First Nat'l. Ins. Co. v. Federal Deposit Ins. Corp., 977 F.Supp. 1051, 1055 (S.D.Cal.1997).
The question presented is a narrow one. Sebastian asks the Court to rule that California Penal Code § 537e applies to Sebastian's Ninth and Tenth causes of Action for Statutory Unfair Competition and common law unfair competition. More particularly, it urges the Court to find that removing holographic codes from Sebastian products is a violation of § 537e. Defendants' motions urge exactly the opposite, namely, that removing codes from Sebastian products is not a violation of the statute. Last August, the Court ruled on Defendants' Motion to Dismiss finding that § 537e makes diverting goods a crime. However, the parties did not debate the scope and purpose of § 537e, as they do here, thus the Court finds that its previous Order does not dictate how it must rule here.
In the absence of controlling state precedent, the Court must interpret and apply § 537e as the California Supreme Court would interpret and apply it. See Elliott v. City of Union City, 25 F.3d 800, 802, n. 3 (9th Cir.1994). In addition, it is worth noting that in California People v. Fields, 105 Cal.App.3d 341, 343, 164 Cal.Rptr. 336 (1980) (citing Cal.Penal Code § 4).2 The California Supreme Court instructs that "[t]he fundamental principle of statutory interpretation is `the ascertainment of legislative intent' so that the purpose of the law may be effectuated." Pollack v. Dep't of Motor Vehicles, 38 Cal.3d 367, 372, 211 Cal.Rptr. 748, 696 P.2d 141 (1985) (citation omitted). This principle of interpretation requires courts "to determine the objective of the Legislature and to interpret the law so as to give effect to that objective even when such an interpretation appears to be at odds with conventional usage or the literal construction of the statutory language." Id.
Turning to the statutory language, § 537e proscribes knowingly possessing "any personal property" from which a serial or identification number or mark has been removed. The statute further states that "For purposes of this subdivision, `personal property' includes, but is not limited to, the following:
(1) Any television, radio, recorder, phonograph, telephone, piano, or any other musical instrument or sound equipment.
(2) Any washing machine, sewing machine, vacuum cleaner, or other household appliance or furnishings.
(3) Any typewriter, adding machine, dictaphone, or any other office equipment or furnishings.
(4) Any computer, printed circuit, integrated chip or panel, or other part of a computer.
(5) Any tool or similar device, including any technical or scientific equipment.
(6) Any bicycle, exercise equipment, or any other entertainment or recreational equipment.
(7) Any electrical or mechanical equipment, contrivance, material, or piece of apparatus or equipment.
(8) Any clock, watch, watch case, or watch movement.
(9) Any vehicle or vessel, or any component part thereof." Prior to 1990, the statute covered specifically identified goods3, none of which was hair care or cosmetic products. In 1997, Section 537e was again amended, at which time the Legislature made the removal of "identification number[s]" and "electronic serial number[s]" from "personal property" a crime.
The parties' debate over the scope of § 537e involves both the statute's language as well as its legislative history. Even though the legislative history does not definitively support either side, the Court finds that the legislative history weighs slightly in Sebastian's favor.
The California Assembly approved the amendment to § 537e on May 21, 1990, and the California Senate followed suit on July 7, 1990. Sebastian quotes from a Senate Report completed a few days before the Senate approved the bill which seems to definitively answer the question before the Court. The Report states that the amendment
would recast those provisions so that the scope of the crime applies equally to all personal property, with the listed items being merely illustrative of what kinds of items are covered. This revision will eliminate the potential for loopholes in the law, and will provide a more consistent application of the prohibition.
See Sebastian's 2nd RFJN at Ex. 9. Similarly, an Assembly Report and the Concurrence in Senate Amendments provide that the items specified in the bill are for illustration "rather than limitation of the scope of the prohibition." Id. at Exs. 9 & 10. Although these excerpts indicate § 537e covers all personal property, there are statements to the contrary elsewhere in the record.
For example, QK quotes another part of the Senate Report, which states the bill "defines `personal property as' [and lists specific examples]." QK also quotes excerpts from bill reports sent to the governor as he considered whether to sign the 1990 bill into law. The quoted statements are:
• "This bill would revise existing law by expanding the number of specified items covered."
• "This bill would amend [§ 537e] to make the knowing, buying, selling, receiving, disposing of, or possession of any personal property item, as specified, from which the manufacturer's serial number ... a misdemeanor ..."
• "This bill would enhance penalties for possession or sale of various items, including vehicles, bearing altered or defaced serial numbers."
See QK's RFJN at Ex. A pgs 15-16, 13-14, & 12 respectively (emphasis added). These excerpts obviously conflict with the Senate Report quoted above. Yet they also seem to conflict with the language of the statute because they suggest that only the items listed are within the statute's scope (e.g. "of various items" or "as specified"); however, the statute includes more than just the listed items ("includes, but is not limited to").
QK also relies on the...
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...to narrow the field of issues for trial through a motion for partial summary judgment. See,e.g., Sebastian Int'l, Inc. v. Russolillo, 151 F. Supp. 2d 1215, 1217 (C.D. Cal. 2001) ("A court may grant summary adjudication on specific issues without granting summary judgment as to the entire ca......