Universal Furniture Int'l, Inc. v. Frankel

• Citation: 835 F.Supp.2d 35
• Decision Date: 29 December 2011
• Docket Number: No. 1:08CV395.,1:08CV395.
• Court: U.S. District Court — Middle District of North Carolina
• Parties: UNIVERSAL FURNITURE INTERNATIONAL, INC., Plaintiff, v. Paul FRANKEL, Defendant.

835 F.Supp.2d 35

UNIVERSAL FURNITURE INTERNATIONAL, INC., Plaintiff,

v.Paul FRANKEL, Defendant.

No. 1:08CV395.

United States District Court,

M.D. North Carolina.

Dec. 29, 2011.

W. Swain Wood, Wood Jackson, PLLC, Raleigh, NC, for Plaintiff.

Peter Joseph Juran, Zaneta Moore Robinson, Blanco Tackabery & Matamoros, P.A., Winston–Salem, NC, for Defendant.

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., District Judge.

Presently before the court is Plaintiff's Motion for Summary Judgment (Doc. 33). Plaintiff Universal Furniture International, Inc., (“Plaintiff” or “UFI”) has filed a memorandum (Doc. 34) in support of its motion, Defendant Paul Frankel (“Defendant”) has filed a memorandum (Doc. 38) in opposition, and Plaintiff has filed a reply (Doc. 44).

Also before the court is Defendant Paul Frankel's Motion for Summary Judgment (Doc. 35). Defendant has filed a memorandum (Doc. 36) in support of his motion, Plaintiff has filed a memorandum (Doc. 40) in opposition, and Defendant has filed a reply (Doc. 42).

Both summary judgment motions are ripe for adjudication. For the reasons that follow, this court will grant Plaintiff's Motion for Summary Judgment (Doc. 33) in part and deny it in part, and this court will grant Defendant Paul Frankel's Motion for Summary Judgment (Doc. 35) in part and deny it in part.

I. BACKGROUND

Plaintiff is a furniture company that is organized and exists under the laws of the State of Delaware, with a principal place of business in High Point, North Carolina. (Compl. (Doc. 1) ¶ 3.) Defendant is a citizen and resident of New Jersey. ( Id. ¶ 4; Answer (Doc. 20) ¶ 4.) At all times relevant to this case, Defendant has been the Vice President, Chief Operating Officer, Secretary, Treasurer, and part owner of Collezione Europa USA, Inc. (“Collezione”), a furniture company that competes with Plaintiff. (Compl. (Doc. 1) ¶ 4; Answer (Doc. 20) ¶ 4; Aff. Paul Frankel Opp'n Pl.'s Mot. Summ. J. (Doc. 39) ¶ 5.) Defendant and his brother founded Collezione and are the company's only officers. (Decl. Annette Lasser Cooley Ex. 1 (Doc. 11–2) at 6, 12.) ¹

In 2004, Plaintiff “filed suit against Collezione asserting claims of copyright infringement, violation of the Lanham Act, and violation of North Carolina's Unfair and Deceptive Trade Practices Act.” Universal Furniture Int'l, Inc. v. Collezione Europe USA, Inc., No. 1:04CV00977, 2007 WL 2712926, at *1 (M.D.N.C. Sept. 14, 2007), aff'd per curiam,618 F.3d 417 (4th Cir.2010). In that case (“the Collezione Litigation”), a judge of this court concluded after a bench trial that: 1) Collezione infringed upon Plaintiff's copyright; 2) Collezione passed off Plaintiff's furniture in violation of the Lanham Act; and 3) Collezione's violation of the Lanham Act also constituted an unfair and deceptive trade practice. Id. This court entered judgment in the Collezione Litigation for Plaintiff, and against Collezione, in the amount of $11,225,777.18. See Universal Furniture Int'l, Inc. v. Collezione Europa, USA, Inc., 599 F.Supp.2d 648, 664 (M.D.N.C.2009), aff'd per curiam,618 F.3d 417 (4th Cir.2010).

Plaintiff filed the Complaint in the instant case in June 2008, asserting false designation of origin, direct and contributory copyright infringement, unfair and deceptive trade practices under N.C. Gen.Stat. § 75–1.1 (“Unfair and Deceptive Trade Practices Act” or “UDTPA”), and unfair competition under North Carolina common law. (Doc. 1 ¶¶ 27–48.) Plaintiff contends that Defendant is “liable to UFI directly, contributorily, and vicariously, for the acts of copyright infringement, unfair competition, and unfair and deceptive trade practices that this Court found in the Collezione Europa Litigation.” (Id. ¶ 2.)

Broadly speaking, Plaintiff's Motion for Summary Judgment (Doc. 33) presents two issues. First, Plaintiff asserts that, under principles of res judicata and collateral estoppel, “all findings of fact, conclusions of law, and other rulings made by this Court in the Collezione Litigation” are binding on Defendant. (Pl.'s Mem. Law Supp. Mot. Summ. J. (Doc. 34) at 2.) Second, Plaintiff argues that “Defendant is personally liable, through principles of direct, contributory, and/or vicarious infringement, for the actions of his company, [Collezione], that were found in the Collezione Litigation to be infringing.” ( Id.)

Defendant Paul Frankel's Motion for Summary Judgment (Doc. 35), however, contends that Plaintiff cannot prove that Defendant is individually liable for false designation of origin, violation of the North Carolina UDTPA, or common law unfair competition. ( See Def.'s Mem. Supp. Mot. Summ. J. (Doc. 36) at 4.) Defendant further contends that Plaintiff cannot prove that Defendant is individually liable under any theory of copyright infringement. ( See id.)

II. LEGAL STANDARD

Summary judgment is appropriate where an examination of the pleadings, affidavits, and other proper discovery materials before the court demonstrates that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. SeeFed.R.Civ.P. 56. The moving party bears the burden of initially demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party has met that burden, then the nonmoving party must persuade the court that a genuine issue remains for trial by “go[ing] beyond the pleadings” and introducing evidence that establishes “specific facts showing that there is a genuine issue for trial.” Id. at 324, 106 S.Ct. 2548, 106 S.Ct. 2548 (internal quotation marks and citation omitted).

In considering a motion for summary judgment, the court is not to weigh the evidence, but rather must determine whether there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court must view the facts in the light most favorable to the nonmovant, drawing all justifiable inferences in that party's favor. Id. at 255, 106 S.Ct. 2505 (citation omitted). A mere factual dispute however is insufficient to prevent summary judgment; the fact in question must be material, and the dispute must be genuine. Fed.R.Civ.P. 56; Anderson, 477 U.S. at 247–48, 106 S.Ct. 2505. Material facts are those facts necessary to establish the elements of a party's cause of action. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A dispute is only “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

III. ANALYSISA. Collateral Estoppel

Plaintiff contends that Defendant is bound by the findings of fact and conclusions of law from the Collezione Litigation. Although Plaintiff references the doctrine of res judicata, Plaintiff offers no argument in favor of applying res judicata in this case. Instead, Plaintiff's arguments focus on collateral estoppel. (Pl.'s Mem. Law Supp. Mot. Summ. J. (Doc. 34) at 9–12.)

Application of collateral estoppel, or issue preclusion, “is central to the purpose for which civil courts have been established, the conclusive resolution of disputes.” Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). Before this court can apply collateral estoppel to an issue or fact, Plaintiff must demonstrate

that (1) the issue or fact is identical to the one previously litigated; (2) the issue or fact was actually resolved in the prior proceeding; (3) the issue or fact was critical and necessary to the judgment in the prior proceeding; (4) the judgment in the prior proceeding is final and valid; and (5) the party to be foreclosed by the prior resolution of the issue or fact had a full and fair opportunity to litigate the issue or fact in the prior proceeding.

In re Microsoft Corp. Antitrust Litig., 355 F.3d 322, 326 (4th Cir.2004).

When a plaintiff seeks to estop a defendant from litigating issues that the plaintiff claims were resolved in a prior proceeding, it is known as offensive collateral estoppel. Offensive collateral estoppel presents a heightened possibility of unfairness to the defendant because, for example, the defendant may have had less incentive to contest the earlier action. Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 330–31, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). This danger of unfairness “counsels that the criteria for foreclosing a defendant from relitigating an issue or fact be applied strictly.” In re Microsoft Corp. Antitrust Litig., 355 F.3d at 327. Further, in deciding whether to permit offensive collateral estoppel,

a court should consider the following nonexclusive factors: (1) whether the plaintiff could have easily joined in the action against the defendant in the earlier action[;] (2) whether the defendant had an incentive in the prior action to have defended the action fully and vigorously; (3) whether the defendant had won litigation other than the prior action that determined the same issues or facts favorably to the defendant; (4) whether procedural opportunities are available in the pending action that were not available in the prior action.

Id. at 326.

This court begins its analysis of this issue by observing that Plaintiff is attempting in the present litigation to hold Defendant liable for the same actions that were attributed to Collezione in the Collezione Litigation. Plaintiff wishes to prevent relitigation of the issues that established Collezione's liability and to proceed directly to the question of Defendant's personal liability for the acts of Collezione. Thus, this court finds that the issues and facts pertaining to Collezione's underlying liability in this case are identical to those previously litigated. See In re Microsoft Corp. Antitrust Litig., 355 F.3d at 326. In raising the question of Defendant's personal liability, this case undoubtedly presents issues that were not addressed in the Collezione Litigation. Indeed, Plaintiff admits this to be the case and does not...