Tim Torres Enterprises, Inc. v. Linscott
| Decision Date | 21 October 1987 |
| Docket Number | No. 86-1702,86-1702 |
| Citation | 142 Wis.2d 56,416 N.W.2d 670 |
| Parties | TIM TORRES ENTERPRISES, INC., a Wisconsin corporation, Plaintiff-Respondent, v. Robert J. LINSCOTT, Linscott Inc., a/k/a Gilles Frozen Custard, Inc., Defendants-Appellants. |
| Court | Wisconsin Court of Appeals |
Review Denied.
William H. Vettel, Milwaukee, for plaintiff-respondent.
Michael, Best & Friedrich, Michael E. Husmann and John E. Flanagan, Milwaukee, of counsel, for defendants-appellants.
Before MOSER, P.J., and WEDEMEYER and SULLIVAN, JJ.
Robert J. Linscott and Linscott, Inc., a/k/a Gilles Frozen Custard, Inc., (Linscott) appeal from a judgment approving a jury verdict in favor of Tim Torres Enterprises, Inc. (Torres). The jury found that Linscott had made untruthful, deceptive or misleading statements in violation of sec. 100.18, Stats., and that these statements defamed Torres. As a result, the jury awarded Torres pecuniary, compensatory and punitive damages.
Linscott raises numerous issues of error. Only the following issues are dispositive of this appeal: (1) whether the evidence is sufficient to support findings that Linscott made untruthful statements contrary to sec. 100.18, Stats., and that Torres suffered any loss as a result of these statements; (2) whether the admission of hearsay testimony was reversible error; and (3) whether a new trial is required because the jury verdict was inconsistent. Because there was sufficient credible evidence to support findings of untruthfulness and Torres' consequent loss, and to support the verdict despite the hearsay testimony, and because the verdict was consistent, we affirm.
To better understand the basis for this appeal, we will briefly review the generally undisputed facts. When it comes to frozen custard, the Paul Gilles Drive-In custard stand, located at the intersection of 76th Street and Bluemound Road in Wauwatosa, Wisconsin, has been a household name in the Milwaukee area for generations. Linscott began working for Paul Gilles in 1947, becoming his manager and eventually taking over the retail business in 1978. Torres began his association with Gilles in 1963. In 1972, after supervising the business' wholesale branch, Torres, by a licensing agreement with Gilles to use the Gilles Frozen Custard trademark and formula, took over the wholesale business and began producing and selling Gilles Frozen Custard from a separate location.
In 1978, when Linscott was considering acquiring the 76th Street retail business, he was aware of Torres' 1972 license agreement and its contents. At Linscott's request a new agreement between Gilles and Torres was executed in 1978. Torres agreed not to sell Gilles Frozen Custard to customers who would resell it in a non-packaged form within a three-mile radius of the 76th Street business, with some exceptions. Linscott then acquired the retail business, although he did not obtain all of the concessions that he had desired.
By these two contracts executed in 1978, both Torres and Linscott had separate licensing agreements with Gilles which allowed each the right to use the Gilles Frozen Custard trademark so long as the custard upon which they placed this trademark met minimum standards set forth in their agreements. Linscott acknowledged that when he bought the retail rights to sell Gilles Frozen Custard at the 76th Street custard stand he was aware that Torres had Gilles Frozen Custard wholesale rights.
In 1979, Torres started selling custard to the Chancery restaurant in Wauwatosa, Wisconsin. A sign was placed at the entry to the restaurant which advertised "Gilles hot fudge sundaes." When Linscott's customers asked him if he was selling custard at the Chancery, he sought legal advice to determine if the sign violated his agreement with Gilles. He called Gilles to object to the sign. The sign was taken down, but the reason for its removal is uncertain.
In September, 1982, Torres began selling custard to a Grand Avenue Mall dessert stand in downtown Milwaukee. A sign was posted stating that Gilles Frozen Custard was available. One of Linscott's customers, after observing the sign, asked him whether he was selling custard in the Grand Avenue Mall. Linscott again sought legal advice and complained to Gilles.
The contents and admissibility of a conversation at a New Year's Eve party in December, 1982, between Gilles and Linscott became highly contested. At trial, Torres was allowed to testify about his conversation with Gilles at that party. Torres stated that Gilles had related to him that "Linscott was very unhappy with the whole situation and that I could expect something to happen."
During this time, Linscott, Gilles, and Torres met to discuss the matter. 1 At this meeting, all parties realized that inconsistencies existed between the separate agreements. Torres did not believe the sign in the Grand Avenue Mall violated any provision in his agreement. He refused to take the sign down and further refused to renegotiate any inconsistent terms in his contract.
In late January or February of 1983, Linscott placed a sign on his custard stand's marquee under the name Paul Gilles, which stated, "Only here can you buy genuine Gilles Frozen Custard." Torres complained to Gilles. Linscott claimed he had displayed the sign because he had received complaints from customers about the quality of the custard produced by Torres and sold in stores. The sign remained up for less than two days; the reasons for its removal are disputed.
In February 1983, Linscott placed a message on the menu board inside the custard stand which stated, "We do not sell 'our' Gilles Frozen Custard in any store." 2
The next incident occurred in April, 1984. The concession vendor for Milwaukee County Stadium purchased cups of custard from Torres which were sold out of portable coolers with signs which stated, When a customer informed Linscott of this, Linscott again conferred with his lawyer, who complained to Torres through Gilles' widow (Gilles had recently passed away). During this time, Linscott placed a second sign on his marquee for two days which stated "Only here do we sell our 'Gilles' Frozen Custard." In September, 1984, for two or three days, Linscott displayed a third marquee sign which stated, "Only here do we sell our original Gilles Frozen Custard."
Additionally, in October 1984, Linscott had 10,000 fliers printed which stated, in part, "[T]here's only one place to buy that old-fashioned ... custard ... Our custard is the original ... available at our drive-in only and not sold in stores." (Boldface and last ellipsis in original.) After 500 of these fliers were distributed at the custard stand, Torres objected, and Linscott stopped circulating them.
On November 30, 1984, Torres commenced five causes of action against Linscott personally and against Linscott, Inc. The trial court submitted only two of the claims to the jury. In the first action, Torres alleged that all five advertised statements were untrue, deceptive or misleading, contrary to sec. 100.18, Stats. In the second action, Torres claimed that these five statements defamed him. He sought punitive damages in both claims.
The jury found that under sec. 100.18, Stats., all of the statements were untrue, deceptive or misleading, and awarded Torres $18,000 for pecuniary loss, and $35,000 for punitive damages. In the defamation action, the jury found that all of the statements had defamed Torres but only the flier had been issued with express malice. The jury awarded Torres $10,000 for damages to his reputation and $10,000 in punitive damages, but did not award any pecuniary loss for the defamatory statements.
In response to motions after verdict, the trial court denied Linscott's request to change unfavorable answers in the verdict, his motion for judgment notwithstanding the verdict, and his motion for a new trial. The trial court did, however, strike the $10,000 punitive damage award granted in the defamation action because it arose out of the same facts involved in the first cause of action and was therefore included in the other $35,000 punitive damage award. Linscott now appeals.
Linscott contends that Torres failed to present sufficient credible evidence that any of the statements under examination were untruthful, deceptive or misleading, or that Torres suffered any loss as a result of the statements. We disagree.
Section 100.18, Stats., entitled "Fraudulent representations," is included in the statutory chapter regulating trade practices. Section 100.18(1), Stats., in relevant part, provides that no person or corporation, with intent to sell, distribute or increase the consumption of anything offered by it to the public, shall place before the public a statement which contains any assertion or statement of fact which is untrue, deceptive or misleading.
Section 100.18(1), Stats., provides protection from untruthful, deceptive or misleading advertising. Since the statute lists three separate alternatives, the factfinder only has to determine that a statement is untrue to find a violation of the statute. 3 Because Linscott has not argued that the jury's scope of inquiry should have been limited to one of the statute's alternatives, we will limit our analysis to whether there was sufficient credible evidence for the jury to find that the statements were untrue.
Linscott analogizes sec. 100.18(1), Stats., to the Lanham Act sec. 43(a), 15 U.S.C. sec. 1125(a) (1982). 4 He cites caselaw interpreting it to claim that if an allegedly false or misleading statement is ambiguous or literally true, then evidence of the public's understanding must be produced in order to prove that the advertisement is deceptive.
Linscott further claims that Torres conceded at trial that the messages on the signs were literally true and that...
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