Marshak v. Treadwell

Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit
7-2-2009
Marshak v. Treadwell
Precedential or Non-Precedential: Precedential
Docket No. 08-1771
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2009
Recommended Citation
"Marshak v. Treadwell" (2009). 2009 Decisions. Paper 902.
http://digitalcommons.law.villanova.edu/thirdcircuit_2009/902
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2009 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 08-1771
_____________
LARRY MARSHAK
v.
FAYE TREADWELL; TREADWELL’S DRIFTERS, INC.;
THE DRIFTERS, INC.,
Appellants,
_____________
No. 08-1836
_____________
LARRY MARSHAK,
v.
FAYE TREADWELL; TREADWELL’S DRIFTERS, INC.;
THE DRIFTERS, INC.
LOWELL B. DAVIS,
Appellant,
_____________
No. 08-1837
_____________
LARRY MARSHAK
v.
FAYE TREADWELL; TREADWELL’S DRIFTERS, INC.;
THE DRIFTERS, INC.
LARRY MARSHAK; ANDREA MARSHAK;
PAULA MARSHAK; CHARLES MEHLICH;
BARRY SINGER; DCPM, INC.;
LIVE GOLD OPERATIONS INC; CAL CAP LTD;
BARRY SINGER; SINGER MANAGEMENT
CONSULTANTS, INC.; DAVE REVELS,
Appellants.
Appeal from the Order of the United States District Court
for the District of New Jersey
(No. 95-cv-3794)
District Judge: Honorable Dickinson R. Debevoise
2
Argued: Tuesday, March 10, 2009
Before: FUENTES, CHAGARES, and ALDISERT, Circuit
Judges.
(Opinion Filed: July 2, 2009)
John A. DeMaro, Esq. [ARGUED]
Ruskin Moscou Faltischek, P.C.
1425 RexCorp Plaza
Uniondale, NY 11556
Attorney for Appellant-Cross Appellee Larry Marshak
and Non-Party Appellants-Cross Appellees Andrea
Marshak, Paula Marshak, Charles Mehlich, Barry
Singer, Dave Revels, DCPM, Inc., Live Gold
Operations, Inc., Cal-Cap Ltd., and Singer
Management Consultants
Jeffrey Schreiber
Meister, Seelig & Fein
2G Auer Court, Williamsburg Commons
East Brunswick, NJ 08816
Attorney for Barry Singer and DCPM Operations, Inc.
Lowell B. Davis, Esq. [ARGUED]
One Old Country Road, Ste. 385
Carle Place, NY 11514
3
Pro Se
Cindy D. Salvo, Esq. [ARGUED]
The Salvo Law Firm, P.C.
101 Eisenhower Parkway, Ste. 300
Roseland, NJ 07068
Attorney for Appellees-Cross Appellants Faye
Treadwell, Treadwell’s Drifters, Inc., and The Drifters,
Inc.
FUENTES, Circuit Judge.
For over a decade, Faye Treadwell (“Treadwell”), widow
of the late music executive George Treadwell, and Larry
Marshak (“Marshak”), a promoter of various doo-wop groups,
have fought tooth and nail over the rights to use the trademark
o f “The Drifters,” the legendary singing group. In the late
nineties, Marshak sued Treadwell for infringement of a federally
registered mark for The Drifte r s that Marshak had obtained in
1978. Treadwell counterclaimed to cancel the registration,
arguing that the mark had been procured by fraud, and that
Marshak was infringing on Treadwell’s senior common-law
rights. In August 1998, a jury issued a split verdict: it found that
Marshak had procured his mark by fraud, but that Treadwell had
abandoned her common law rights to the mark through inaction.
However, approximately one year after the jury ve r dic t, Judge
P o litan granted judgment as a matter of law for Treadwell.
Marshak v. Treadwell, 58 F. Supp. 2d 551 (D.N.J. 1999). Judge
4
P o litan agreed with the jury that Marshak had made
misrepresentatio ns to the Patent and Trademark Office, but
determined that the mark had not been abandoned, as the music
of The Drifters was still played on the radio and sold in stores.
Marshak appealed Judge Politan’s decision and we affirmed.
Marshak v. Treadwell, 240 F.3d 184 (3d Cir. 2001).
The case now be f o re us focuses on the breadth of the
injunction and efficacy of the remedies that were issued along
with Judge Politan’s ruling. Judge P o litan enjoined Marshak
and his company f r o m marketing The Drifters anywhere – not
On Broadway, not Up On the Roof, and not Under the
Boardwalk – and ordered a f ull accounting of profits. In the
years that followed, however, various family members and
associates of Marshak picked up where Marshak left off, and
began again promoting The Dr if te rs, just as Marshak had.
Treadwell, thinking that these actions were not Some Kind of
Wonderful, thus brought the instant motion for contempt,
arguing that the Politan injunc tion applied to Marshak’s
associates as well as to M ar s hak. After a lengthy hearing, the
District Court found that Marshak and his associates were in
contempt of the Politan injunction, but limited Treadwe ll’s
remedies to an award of attorneys’ fees. Bo th s ides then
appealed: Marshak and his associates appealed the merits of the
de c ision, while Treadwell challenged the paucity of the
remedies.
For the reasons that follow, we affirm in part and reverse
and remand in part.
5
I.
A.
The dispute in this case centers on the trademark rights
to The Drif te r s , a popular singing group from the 1950s and
1960s.1 The Drifters first appeared in 1953 and came under the
management of George Treadwell the following year. George
Treadwell hire d and paid the individual performers as
employees, replacing them frequently. For nearly two decades,
The Drifters as an entity persisted, tho ugh the membership of
the group was constantly in f lux. George Treadwell passed
away in 1959, and his wife, Faye Treadwell, to o k over
management of the group.
By 1970, The Drifters had lar gely ceased to perform in
the United States, although their songs were still played on the
radio. Marshak, an editor for a roc k magazine, saw this as an
opportunity. Working with CBS Radio, which had shifted to an
“oldies” format, Marshak reunited some of the former members
o f the group – those who had been replaced over the years by
the Treadwells – for a series of reunion concerts. Capitalizing
on the success of these concerts, Marshak signed the f o rmer
members to exclusive manage ment contracts and began
marketing them as “The Drifters.”
Over the next thre e de cades, Marshak continued
marketing The Dr if ters in the United States. His efforts at
1
The background facts of this dispute have be e n treated
exhaustively by a pre vio us panel of this Court. Marshak, 240
F.3d at 187-90.
6
promotion were occasionally interrupte d by trademark
infringement litigation – Faye Treadwell sued Marshak, and
Marshak in turn sued other Drifters promote r s – but these
lawsuits were often inconclusive.2 By the late nineties,
however, the litigation over The Drifters finally produced a
decisive result: as described above, in July 1999, Judge Politan
determined that Marshak had acquired his rights to The Drifters
mark by fraud and that Treadwell’s rights to The Dr ifters were
superio r . Marshak, 58 F. Supp. 2d at 568, 575. Judge Politan
enjoined Marshak and his company, RCI Management (“RCI”),
from promoting groups performing under the name of The
Drifters, Marshak v. Treadwell, No. 9 5 - CV-3794 (D.N.J. Aug.
16, 1999) (order of contempt, permanent injunc tion, and
accounting) (“Politan Injunction”), and we affirmed, Mars hak,
240 F.3d at 200.
With the issuance of the injunction, Marshak should have
been out of The Drifters business. In the year and a half leading
up to the issuance of this injunction, however, Marshak and his
associates had begun to reorganize his promotion business in
ways that complicated the effect of Judge Politan’s injunction.
It is the nature of this reorganization that lies at the center of the
contempt proceeding now before us.
2
Other classic singing groups with trans itory
memberships have undergone similar le gal disputes. The
trademark rights to The Duprees, a doo-wop group from Jersey
City, have recently been the subject of litigation in New Jersey
district courts. Charles Toutant, “The Duprees Play On, and So
Does Dissonance Over Their Ownership,” 195 N.J .L.J. 493,
Feb. 23, 2009, at 21.
7
B.
In the years before the injunction was issued, Marshak
promoted groups like The Drifters through RCI. Andrea
Marshak, Marshak’s wife, and Paula Marshak, Marshak’s sister-
in-law, both worked f or RCI, as did Dave Revels (“Revels”).
Charles Mehlich (“Mehlich”) served as RCI’s accountant, and
Lowell Davis (“Davis”) served intermittently as RCI’s attorney.
The business was run out of Marshak’s basement.
Beginning in 1996, Marshak began to experience some
health difficulties. According to Andrea Marshak, for the next
year or so she and Paula Marshak handled much of the business
of RCI, allowing Marshak to convalesce. Finally, in early 1998,
after the work bec ame too “overwhelming,” they collectively
decided to dissolve RCI and form a new company called DCPM,
Inc. (“DCPM”) . 3 DCPM was officially formed on January 21,
1 9 9 8 , and was co-owned by Andrea Marshak, Paula Marshak,
Mehlich, Revels, and Dave Backer (“Backer”). These same
owners also formed Cal-Cap, a licencing corporation created to
work alongside DCPM. DCP M was f o rmed as a “sort of
successor to RCI.” (App. 229 (Marshak De c l.) ¶ 3.) It
“basically picked up where RCI left off,” (App. 519 (Paula
M arshak Decl.) ¶ 5), and was “engaged in the same kind o f
singing gr oup promotion business as . . . RCI,” (App. 162
(Mehlich Decl.) ¶ 5). In addition, DCPM was operate d out of
the same offices in Marshak’s basement that housed RCI.
3
DCPM, Inc. was subsequently rename d DCPM
Operations. For the purposes of this Opinion, we will refer to
both companies as “DCPM.”
8
For a brief period of time, RCI and DCPM coe xis ted.
RCI’s last show was in November of 1998 – over eight months
after DCPM was formed – although RCI was not officially
dissolved until March 2003. After the reorganization, Marshak
was officially retained as an employee of DCPM, not as an
owner.
In August 1998 , six and a half months after DCPM was
formed, the jury returned a verdict in Marshak v. Treadwell, the
underlying case. Overall, the verdict was favorable to Marshak
– although the jury found that Marshak had procured his Drifters
trademark by fraud, the jury also found Treadwell had
abandoned her common law rights to the mark through inaction.
As a result, Marshak retained common law rights in The Drifters
mark. Marshak’s victory, however, was relatively short-lived.
On July 30, 1999, approximately a year later, Judge Politan
vacated the jury verdict and issued judgment in f avor of
Treadwell, rejecting the jury’s finding that Treadwell had
abandoned The Drifters mark.
Up until February 9, 2001, when the P o litan Injunction
was affirmed by a panel of this Co urt, The Drifters had been
appearing nightly at the Sahara Ho te l and Casino with The
P latters and The Coasters. All three groups were provided by
DCPM, which had been ass igne d Marshak’s rights to The
Drifters under his employment contract. Once the injunction
became effective and Marshak lost his rights to The Drifters
name, however, DCP M also lost its rights to The Drifters, and
thus DCPM could only marke t The Platters and The Coasters.
Shortly thereafter, the Sahara show closed – The Drifters were
the biggest box off ic e dr aw of the three groups, and the show
could not survive with only The Platters and The Coasters.
9
Barry Singer, a longtime business associate of Marshak,
had brokered the original deal between RCI and the Sahara prior
to the issuance of the injunction. Once the injunction barred
The Drifters from appearing with the Platters and the Coasters,
Singer attempted to obtain independent rights to The Drif ters
name, e ven going so far as to negotiate with Treadwell. These
efforts, however, were unsuccessful.
In August 2001, around the time that Singer was
attempting to secure independent rights to The Drifters mark,
Davis, who had previously worked as an attorney for Mars hak,
approached Mehlich, a co-owner of DCPM and Marshak’s ex-
accountant, and informed Mehlic h that Odessa Hobbs, the
widow of Elsbeary Hobbs, a past member of The Drifters, was
interested in licensing the name “The Elsbeary Hobbs Drifters.”
According to Davis, Odessa Hobbs had s e ttled with Treadwell,
and could now license the trademark. Mehlich approached his
par tners at DCPM about this opportunity, but according to
Mehlich, no one at DCPM thought it wise to pursue that
particular license given the injunction against Marshak. Singer,
however, was interested. Singer subsequently f ormed a new
company, Singe r Management, for the express purpose of
acquiring the rights to The Elsbeary Hobbs Drifters. He invited
Mehlich to come in as a co-owner of Singer Management.
Mehlich agreed, becoming an owner of DCPM and Singer
Management simultaneously. In October 2001, the de al was
completed – Singer Management entered into a licence
agreement with Odessa Hobbs to use The Elsbe ary Hobbs
Drifters mark. By early 2002, the old Sahara show was reunited,
with The Platters and The Co asters now playing alongside The
Elsbeary Hobbs Drifters.
10
On No ve mber 27, 2006, Treadwell filed a motion for
contempt, alleging that Marshak and his associates had
continued to infringe upon her Drifters mark in violation of
Judge Politan’s order. The Dis trict Court issued its contempt
decisio n o n September 7, 2007, and made the following
holdings relevant to this appeal. Marshak v. Treadwell, No. 95-
CV-3794, 2007 WL 2687454 (D.N.J. Sept. 10, 2007) (“Liability
Opinion”). First, the District Court rejected the argument that
Treadwell’s action for co nte mpt was precluded by laches. It
observed that the delay in filing may have been inexcusable, but
Appellants did not show pr e judice by the delay, a required
component of the equitable defense. Second, the District Court
held that Treadwell did not relinquish her rights to The Drifters
mark to Odessa Hobbs in the January 6, 1999 settlement. Third,
the District Court held that J udge Politan’s court order was
valid, despite a 2004 decision rendered by the Trademark Trial
and Appeal Board (“TTAB”) holding that ex-Drifter Bill
Pickney had superior rights to Treadwell. Finally, and most
significantly for the purposes of this appeal, the District Court
held that the injunction was enforceable agains t parties other
than Marshak and RCI – specifically, the companies and
employees connected to Marshak that continued to market The
Drifters after the injunction issued.
On September 20, 2006, Appellants moved for
reconsideration of the District Court’s Liability Opinion.4 The
4
This motion for reconsideration was subsequently
amended to include a request for reconsideration of the District
Court’s subsequent supplementary order on damage s . This
aspect of the motion for reconsideration will be addressed in
11
District Court issued an opinion on February 13, 2008,
addressing the motion for reconsideration. M ar shak v.
Treadwell, No. 95-CV-3794, 2008 WL 413312 (D.N.J. Feb. 13,
2008) (“Reconsideration Opinion”). For the most part, the
Reconsideration Opinion endorsed the findings of the Liability
Opinion. It did, however, make one significant change: it
ac kno wledged that the previous Liability Opinion contained
some factual inaccuracies. In the Liability Opinion, the District
Court had inaccurately stated that DCPM was formed around the
same time that RCI was dissolved, and that this took place
coincident with the “unfavorable” jury verdict. In actuality, the
jury verdict, which was a split decision, was arguably favorable
to Marshak and was issued eight months after DCPM was
formed. The Distric t Co urt acknowledged these factual
mistakes, but noted that these mistakes “[did] not affect . . . the
Court’s controlling findings and conclusions of law concerning
the relationship of M ar s hak and the other Marshak movants.”
Marshak, 2008 WL 413312, at *8.
II.
A.
We review a district court’s decision on a motio n for
contempt for abuse of discretion. Roe v. Operation Rescue, 54
F.3d 133, 137 (3d Cir. 1995). Reversal is therefore appropriate
only where the decision “‘is base d o n an e rror of law or a
finding of f ac t that is clearly erroneous.’” Id. (quoting
Harley-Davidson, Inc . v. Morris, 19 F.3d 142, 145 (3d Cir.
Section II.D of this Opinion.
12
1994)).5
B.
“A plaintiff must prove three elements by clear and
convincing evidence to establis h that a party is liable for civil
contempt: (1) that a valid order of the court existed; (2) that the
defendants had knowledge of the o r der; and (3) that the
defendants disobeyed the order.” Id. (internal quotation marks
omitted).
As an initial matter, we reject Appellants’ challenge to
the validity o f J udge Politan’s injunction. As we have
frequently stated, a party who is alleged to be in contempt of a
court order may not challenge the substantive merits of that
order within contempt proceedings. Roe v. Operation Rescue,
919 F.2d 857, 87 1 (3d Cir. 1990) (“[T]he validity of the order
may not be collaterally challenged in a contempt proceeding for
violating the order.”); Halderman v. Pennhurst State Sch. &
Hosp., 6 7 3 F.2d 628, 637 (3d Cir. 1982) (“There are strong
policy reasons for limiting review, even in post-final judgment
contempt proceedings , to matters which do not invalidate the
underlying order.”). In addition, there is no serious dispute that
the various Appellants had knowledge of the o rder.
Accordingly, the first two elements of the contempt standard are
easily satisfied. This appeal, therefore, comes down to whether
the District Court abused its discretion in finding the third
element s atisfied – that is, whether Appellants disobeyed the
order upon a sho wing of clear and convincing evidence. We
will review the District Judge’s factual findings in this regard
5
We have jurisdiction pursuant 28 U.S.C. § 1291.
13
for clear error.
Before reviewing the District Judge’s factual f indings,
however, we must address a threshold matter. Appellants have
challenged the District Court’s basis for holding the non-parties
to the injunction – essentially, each Appellant other than
Marshak and RCI – in contempt of the Politan Injunction.
Whe the r a party may be held in contempt by an injunction is
governed by Federal Rule of Civil Procedure 65(d) ( “Rule
65(d)”). Pursuant to Rule 65(d), the following persons may be
bound by an injunctive order so long as they receive actual
notice of the injunction:
(A) the parties;
(B) the parties’ officers , agents,
servants, employees, and attorneys;
and
(C) other persons who are in active
c o nc e rt or participation with
a n y o n e d e s c r ibe d in Ru l e
65(d)(2)(A) or (B).
Fed. R. Civ. P. 65(d)(2). “Rule 65(d) ‘is derived from the
common-law doctrine that a decree of injunction not only binds
the parties [] but also those identified with them in interest, in
“pr ivity” with them, represented by them or subject to their
control.’” Golden State Bottling Co. v. N.L.R.B., 414 U.S. 168,
180 (1973) (quoting Regal Knitwear Co. v. N.L.R.B., 324 U.S.
9, 14 (1945)); see also Alemite Mfg. Corp. v. Staff, 42 F.2d 832,
833 (2d Cir. 1930) (Hand., J.) (noting that a non-party may be
punished for violating an injunction if that non-party is “legally
14
identified” with the enjoined party). Co urts, however, have
admitted a significant exception to the general maxim that only
parties and their privies may be bound by an injunc tio n:
specific ally, non-parties “guilty of aiding or abetting or acting
in concert with a named defendant or his pr ivy in violating the
injunction. . . . may be held in contempt.” Savarese v. Agr is s,
883 F.2d 11 9 4 , 1209 (3d Cir. 1989) (internal citation and
quotation marks omitted); Max’s Seafood Cafe ex rel. Lou-Ann,
Inc. v. Quinteros, 176 F.3d 669, 674 (3d. Cir 1999) (“One with
knowledge of a court order who abets ano ther in violating the
o r der is surely in contempt.”); Operation Rescue, 919 F.2 d at
871 (“[T]hose who have knowledge of a valid court order and
abet others in vio lating it are subject to the court’s contempt
powers.”); Alemite, 42 F.2d at 832 (“[A] person who knowingly
assists a defendant in violating an injunction subjects himself to
civil as well as criminal proceedings for contempt. This is well
s e ttled law.” (citing Ex Parte Lennon, 166 U.S. 548 (1897) ) ) .
Without such an e xc eption, defendants might “nullify a decree
by carrying out prohibited acts through aiders and abettors,
although they were not par ties to the original proceeding.”
Regal Knitwear, 324 U.S. at 14; Max’s Seafood Cafe, 176 F.3d
at 674 (“‘The law does not permit the instigator of
contemptuous conduct to absolve himself of contempt liability
by leaving the physical performance of the forbidden conduct to
others.’” (quoting Operation Rescue, 919 F.2d at 871)).
There is, of course, no do ubt that Judge Politan’s
injunction applies to Marshak and his company, RCI – the
15
parties specifically named in the order.6 However, the other
parties held in contempt by the Distr ic t Court – Andrea
Mar s hak, Paula Marshak, Revels, Mehlich, Davis, Singer,
Singer Management, DCPM, and Cal-Cap – we r e not
specifically named in Judge Politan’s injunction. The question
before the court, therefore, is whether the District Court
provided a legally sound basis under Rule 65(d) for a finding of
contempt against the non-parties to the injunction.
The District Court did delineate a basis under Rule 65(d)
for holding each Appellant in contempt of the injunction.7 It
6
The order signed by Judge Politan specifically enjoined
“Marshak and his employees, assigns, licensees, agents, as well
as any and all entities in which he owns any stake or over which
he exerts any influence (including but not limited to RCI
Management)” from using The Drifters mark. Marshak, No. 95-
CV-3794 (D.N.J. Aug. 16, 1999).
7
Appellants argue that Treadwell’s initial motion papers
include d af f idavits from individuals that were never called to
testify during the hearing, and that the District Cour t’s finding
of contempt cannot be based on statements from individuals
made unavailable for cross-examination. From our review of
the relevant opinions, the District Court did not base its findings
on any of these affidavits – not a single one is mentioned in its
opinions. Rather, the District Cour t’s o pinions rely on the
testimony of Appellants themselves and several witnesses who
testified at the hearing and were available for cross examination.
We see no indication that the evidence the District Court relied
upon was in any way improper.
16
determined that Andrea Marshak, Paula Marshak, Mehlich,
Revels, and Davis were subject to the injunction as
employees/attorneys of Marshak and/o r RCI; that Singer and
Singer Management were liable for being in ac tive concert or
par ticipation/aiding and abetting Marshak’s violation of the
injunction; and that DCPM and Cal-Cap were subje c t to the
contempt powers as successors-in-interest to RCI. Putting aside
( f or a moment) the question of whether the facts bear out the
District Court’s holdings, we see no error in the basis chosen for
holding Singer, Singer Management, DCPM and Cal-Cap in
contempt. Singer and Singe r Management were properly
analyzed as parties in active concert or participation/aiding and
abetting Marshak, and DCP M and Cal-Cap were properly
analyzed as successors-in-interest. The problem, rather, is with
the District Court’s initial treatment of Andrea Marshak, Paula
Marshak, Mehlich, Revels, and Davis as parties directly subject
to the injunction as employees of M ar s hak and/or RCI. See
Marshak, 2 0 0 7 WL 2687454, at *9 (“[U]nder the language of
bo th Rule 65 and Judge Politan’s order, not only is Marshak
directly enjoined, but also directly enjoined are Andrea
Marshak, Paula Marshak, Mehlich, Revels, and Davis as
servants, employees, or agents of Marshak in his business entity
of RCI.”).
The District Court’s Liability Opinion misstated the
chronology of events leading to the formation of DCPM. In that
opinion, the District Co ur t stated that “coincident with the
August, 1998, unfavorable verdic t returned against him in
Marshak v. Treadwell, Marshak . . . dissolved RCI” and
“[a]bout the time Marshak dissolved RCI, . . . Andrea,
Marshak’s wife, f o r me d DCPM, Inc.” Marshak, 2007 WL
172687454, at *10. This chronology of events, as acknowledged
by the District Court in its Reconsideration Opinion, was
incorrect. In actuality, DCPM was formed o ve r six months
before the jury rendered its verdict, and over eight months
before RCI promoted its last show. Moreover, the jury verdict
itself was not e ntir e ly unfavorable to Marshak – rather, only
after Judge Politan’s judgment as a matter o f law, which was
published nearly a year after the jury issued its ve r dict, did
Marshak find himself without any legal rights to The Drifters
mark.
The District Court issued its Reconsideration Opinion, in
part, to correct these factual inaccuracies. It held, however, that
those mistakes in fact did not affect the Court’s “controlling
findings and conclusions of law concerning the relationship of
Marshak and the other Marshak movants . . . .” Marshak, 2008
WL 413312, at *4. Although the District Court did not specify
why the factual mistakes in the liability opinion did not affect
the judgment, we find no error in its conclusion. See Dandridge
v. Williams, 397 U.S. 471, 4 7 5 n.6 (1970) (“The prevailing
party may, of course, assert in a reviewing court any ground in
support of his judgment, whether or not that ground was relied
upon or even considered by the trial court.”); Cospito v.
Heckler, 742 F.2d 72, 78 n.8 (3d Cir. 1984) (same) . W hile
Andrea Marshak, Paula Marshak, Mehlich, Revels, and Davis
could not be enjoined as employees of RCI – each had ceased to
serve Marshak and RCI in an employment capacity more than a
year prior to issuance of the injunction – as noted above, persons
“in active concert or participation” with an enjoined party are
also bound by the injunction, and may not aid or abet the
violation of the injunction. See, e.g., Max’s Seafood Cafe, 176
18
F.3d at 674. Therefore, it is not essential that Andrea Marshak,
Paula Marshak, Mehlich, Revels, and Davis have been
employees of RCI at the time that the injunction was issued to
find themselves subject to the contempt powers of the court.
Havi ng determined that there is an adequate legal bas is
for applying the contempt s tandard against each appellant, we
now turn to the factual findings made by the District Court. We
revie w the District Court’s factual findings for clear error.
Unde r such review, “[w]e accept the ultimate factual
determination of the fact-finder unless that de te rmination is
either ‘(1) comple tely devoid of minimum evidentiary support
displaying some hue of credibility, o r ( 2 ) bears no rational
relationship to the supportive evidentiary data.’” Frett-Smith v.
Vanterpool, 511 F.3d 396, 400 (3d Cir. 2008) (quoting Krasnov
v. Dinan, 465 F.2d 1298, 1302 (3d Cir. 1972)).
Reviewing the r ecord in its entirety, we find ample
s upport for the District Court’s contempt findings agains t
M ar shak, Andrea Marshak, Paula Marshak, Mehlich, Davis ,
Singer, and Singer Management. Treadwell initiate d these
contempt proceedings on November 28, 200 6 . As the case
progressed, Marshak decided to slowly dissolve RCI. His wife
Andrea Mars hak, who had long worked for RCI, immediately
stepped into the breach and forme d DCPM – a company that
would essentially replicate the work o f RCI. She then invited
Paula Marshak, Mehlich, and Revels – all pas t e mployees of
M arshak/RCI – to become co-owners of DCPM. In Paula
Marshak’s own words, DCPM “picked up where RCI left off”
(App. 519 ¶ 5) – doing the same work as Marshak and RCI, only
unde r a different name. Even the place of business stayed the
same – DCPM, owned and operated by the same personnel that
19
previously ran RCI, found a home in Marshak’s basement.
Marshak, once the boss, was not “merely” an employee.
Up until the moment the injunction issued, DCPM
continued to market The Drifters based on Marshak’s presumed
common law rights. Once the injunction issued, however,
DCPM was banne d f r om using the mark. Immediately,
however, the parties scrambled to evade the injunction. Davis,
Marshak’s former attorney, approached Singe r, the man who
brokered the original Sahar a show, about purchasing rights to
The Drifters mark through Odessa Hobbs – ignoring the fact that
Judge P o litan had previously held that Hobbs had no rights to
license the mark. Marshak, 2007 WL 2687454, at *18
(determining that the settlement with the widow of Elsbeary
Hobbs “reflects nothing more than Treadwell’s agreement to
make certain royalty payments” and that Treadwell did not
“disavow any rights or claims to the name ‘Drifters’” (quoting
Marshak v. Treadwell, 58 F. Supp. 2d at 564)).8 Neverthe le s s,
8
Appellants argue that by purchasing the rights to the
“Elsbeary Hobbs Drifters” from Odessa Hobbs, they had a good
faith basis for using The Drifters mark. We disagree. Judge
Politan analyzed the documents generated by the settlement
between Treadwell and Odessa Hobbs and did not find any
indication that the settlement granted Odessa Hobbs a claim of
ownership over The Drifters mark. Marshak v. Treadwell, 58 F.
Supp. 2d at 564. Despite this finding, and our subsequent
affirmance of Judge Politan’s opinion, Davis brokered the sale
of Hobbs’s rights to Singer Management less than a year later,
and Appellants rehash their ar gument that this settlement
granted them an alternate means to use The Drifters mark. Like
20
Singer inked the deal and began marketing The Drifters through
Singer Management, a company created specifically for this
purpose. Then, shockingly, Singer invited Mehlich, a co-owner
of DCPM, to beco me a c o-owner of Singer Management, and
the District Court, Marshak v. Treadwell, 2007 WL 2687454, at
* 1 8, we see no evidence to warrant disturbing Judge Politan’s
analysis of the trademark rights generated by the settlement.
We also reject Appellants’ argument that the 2004
decision by the Trademark Trial and Appeal Board (“TTAB”)
in the case of Willie B. Pinkney v. Treadwell’s Drifters, Inc .,
Opp’n No. 91151984, 2004 WL 2368485 ( TTAB Sept. 24,
2004), somehow change d the landscape of this case. In that
proceeding, Pinkney, a former Drifter, successfully argued that
he had continuously used The Drifters mark prior to Treadwell.
Appellants argue that a consent agreement betwe e n Marshak
and Pinkne y signed in 1981 placed Marshak in privity with
Pinkney, and thus once Pinkney was granted rights to use the
mark, Marshak also was entitled to use the mark. As noted by
the District Court, the truth is “precisely the opposite.”
Marshak, 2007 WL 2687454, at *20. The consent agr e e ment
s igned by Marshak and Pinkney stated that Marshak was the
legal holder of The Drifters mark, but granted Pinkney the right
to use the mark during Pinkney’s lifetime. (App. 465-66.)
Accordingly, the only trademark rights discussed in the consent
agreement were those held by Marshak, which were
subsequently invalidated by Judge Politan as being procured by
fraud. Like the agreement with Odessa Hobbs, the consent
agreement with Pinkne y does not offer Appellants an alternate
basis for using The Drifters mark.
21
moved the operation to – where else? – Marshak’s basement.
Thus, after a year’s interlude, The Drifters were once again
being marketed out of the same basement office by the same
people.
Over the next few years, the various denizens of
Marshak’s bas e ment gave lie to the notion that DCPM and
Singer Management were separate and distinct entities. Singer
Management and DCPM shared the same office and phone
number. Inquiries by a private investigator re ve ale d that
principals of DCPM – not Singer Manageme nt – would
willingly quote prices for The Drifters and fax out employment
contracts, behavior that DCPM’s owners unconvincingly
described as “unintentional.” DCPM even sent out me dia kits
advertising the services of a suite of pe r f o r mers that included
The Drifters.
The District Court credited significant evidence to this
effect, both circumstantial and direct, in holding that Marshak
and the principals of DCPM and Singer Management had
reassembled Marshak’s business under different names in order
to evade the Politan Injunction. We see no clear e r r or in this
determination.
Likewise, we find no clear error in the District Court’s
holding that DCPM and Cal-Cap were successors in interest to,
or a mere continuation of, RCI. The District Court applied New
Jersey law, citing Bowen Engineering v. Estate of Reeve, 799 F.
Supp. 467 (D.N.J. 1992):
In determining whethe r or not
successor liability s hould be
imposed, “[i]t is the duty of the
22
court to examine the substanc e of
the transaction to ascertain its
purpose and true intent.” Factors
relevant to the “mere continuation”
exception include continuity of
o wn e r s h i p ; c o n t i n u i t y o f
manage me nt; c o n t i n u i t y o f
personne l; continuity of physical
location, as s e ts and ge ne r al
business operations; and cess ation
of the prior business shortly af ter
the new entity is formed. Also
relevant is the extent to which the
successor intended “to incorporate
[the predecessor] into its system
with as much the same s tr ucture
and operation as possible.” Thus
the court should determine whether
“the purc haser holds itself out to
the wo r ld as the effec tive
continuatio n o f the s e ller.”
Ho we ve r , the pr o po nent o f
s uc c e s sor liability ne e d no t
necessarily establish all of these
factors.
Bowen, 799 F. Supp. at 487-88 (inte rnal citations omitted and
23
alterations in original).9 Although certain factors weighed
against f inding DCPM and Cal-Cap to be successors to RCI –
namely, the c hanges in ownership and management – the
majority of factors clearly weighed in favor of finding DCPM
and Cal-Cap to be successors in interest to RCI: the personnel
of each bus iness were the same, the location of each business
was the same, the assets of each business were the same, the
general operations of each business were the same, and RCI
folded shortly after DCPM was formed. Considering the record
as a whole, we find no clear error in the District Court’s
determination that DCPM and Cal-Cap were formed to replace
and continue the wo rk of RCI, nor any error with the District
Court’s concomitant decis io n to hold DCPM and Cal-Cap in
9
Appellants argue that the district judge ignored the ir
argument that New York law, not New Jersey law, should have
been applied. We find no error in the District Court’s decision
to employ New Jersey law. We note, however, that the
differences between the New Jersey and New York law on this
subject are minimal, and would not have affected the outcome.
Compare Bowen, 799 F. Supp. at 487-88 with Nettis v. Le vitt,
241 F.3d 186, 193-94 (2d Cir. 2001) (noting that in determining
whether a business is the “mere continuation” of another,
“courts consider (1) continuity of ownership; (2) cessation of
ordinary business by the prede c essor; (3) assumption by the
successor of liabilities ordinarily necessary for continuation of
the predecessor's business; and (4) continuity of management,
personnel, physical location, assets, and general business
operation”), overruled on other grounds by, Slayton v. American
Express Co., 460 F.3d 215 (2d Cir. 2006).
24
contempt. See Walling v. James V. Reuter, Inc., 321 U.S. 671,
674 (1944) (“[A]n injunction enforc[e a]ble by contempt
proceedings against the corporation, its agents and officers and
those individuals associated with it in the conduc t of its
busine s s , but it may also, in appropriate circumstances, be
enforced against those to whom the business may have been
transferred, whether as a means of evading the judgment or for
other reasons.” (internal citations omitted)); G. & C. Merriam
Co. v. Webster Dictionary Co., 639 F.2d 29, 40 (1st Cir. 1980)
(“A party and his privies cannot circumvent a court’s injunction
against the activities they had effectuated before the injunction,
through one legal entity, by the creation of another entity
through which they, or some of the m, continue essentially the
same activity.”).
C.
Although we largely uphold the District Court’s contempt
determinations, we will reverse its findings in regard to Dave
Revels. Revels, a principal of DCPM, was the individual who
mailed out media kits to entertainment producers off e r ing the
services of The Drifters. In respect to his conduct, he is like the
other principals of DCPM, each of whom were properly held in
contempt by the District Court. Our concern, rather, is with the
procedure by which he was held in contempt.
Revels, like the other DCPM principals, was not named
in the injunction. As noted above, this itself is not a barrier to
a finding of contempt. The key differ e nc e separating Revels
from the other DCPM principals , however, is that Treadwell
never actually moved for Revels to be held in contempt. Revels
became involved in this proceeding as a witness for Appellants.
25
See Marshak, 2007 WL 2687454, at *4 (noting that Revels
testified on behalf of Appellants). In so testifying, Revels
revealed an invo lve ment in the business of DCPM that led the
District Court t o inc lude him among the parties held in
contempt.
We have two concerns with the process employed by the
District Court. First, we are troubled by the District Court’s
f ailur e to acknowledge that it was holding a non-party to the
proceeding liable for contempt. While there is ample authority
holding that a district court may issue a f inding of contempt
against a non-party, courts that do so typically acknowledge the
unique status of the non-party, and specifically note the
authorities that permit such exercise of judicial power. See
Operation Rescue, 54 F.3d at 140 (reversing trial c o urt’s non-
imposition of contempt by non-parties, but noting that the trial
court acknowledged the non-party status of would- be
contemnors and acknowledged the court’s po wer to hold such
an individual in contempt); Roe v. Operation Rescue, No. 88-
CV-5157, 1988 WL 131407, at *1, *4 (E.D. Pa. Dec. 6, 1988)
(same), aff’d in relevant part, 919 F.2d 857 (3d Cir. 1990).
Although we do no t presume that the District Court
misunderstood the step it was taking in holding Revels liable for
contempt, nor that it inadvertantly considered Reve ls a proper
defendant, the record does not reveal any overt acknowledgment
that Revels’s status was, in fundamental respects, different than
the other DCPM principals.
Second, and more significantly, we reverse based on the
lac k of notice tendered to Revels prior to the finding o f
contempt. Treadwell initiated this contempt proceeding against
26
some, but not all, of the principals of DCPM.10 Treadwell never
mo ve d for a finding of contempt against Revels; Revels only
appeared in this proceeding as a witness. In Quinter v.
Volkswagen of America, we upheld a finding of contempt
against a non-party witness for violation o f court order. 676
F.2d 969, 974 (3d Cir. 1982). In that cas e , ho wever, the
aggrieved party specifically moved for a f inding of contempt
against the witness, putting him on notice of his potential
liability and trigge r ing a hearing. Id. at 972 (noting that
Volkswagen filed a motion for sanctions against Bloch after he
deliberately divulged evidence placed under protective order);
see also Latrobe Steel Co. v. United Steelworkers o f Am.,
AFL-CIO, 545 F.2d 1336, 1343-44 (3d Cir. 1976) ( “Civil
contempt proceedings are instituted primarily on the motion of
the plaintiff . . . .”) . This is no trivial detail. “Due process
requires that a potential contemnor be given notice and a hearing
regardless of whether the contempt is civil or criminal in
nature.” Newton v. A.C. & S., Inc., 918 F.2d 1121, 1127 (3d
Cir. 1990) (citing In re Grand Jury Proceedings, 795 F.2d 226,
234 (1st Cir. 1986)); Harris v. City of Philadelphia, 4 7 F.3d
1 3 11, 1322 (3d Cir. 1995) (noting that before a district cour t
may issue a finding of contempt for failure to obey a court order,
“it is appropriate to give notice by an order to show cause and to
hold a hearing”); Roe v. Operation Rescue, 920 F.2d 213, 217
(3d Cir. 1990) (noting that due process requir e s , before
imposition of a finding of civil conte mpt, “an opportunity
10
Revels was not the only principal of DCPM omitted
from Treadwell’s complaint – Dave Backer was similarly
excluded.
27
granted at a meaningful time and in a meaningful manner for a
he ar ing appropriate to the nature of the case.”); see Max’s
Seafood Cafe ex rel Lou- Ann, Inc., v. Quinteros, No. 90-CV-
2137, 1997 U.S. Dist. LEXIS 23597, at *30 n.2 (D.N.J. Dec. 18,
1997) (refusing to issue finding of contempt against non-party
because non-party only appeared as a witness and was not
represented by counsel at the hearing), rev’d on other grounds,
176 F.3d 669. “These customary procedural safeguards ensure
that the parties or their attorneys have an opportunity to explain
the conduct deemed deficient before the fine is imposed and that
a record will be available to facilitate appellate review.”
Newton, 918 F.2d at 1127 (citing Eash v. Riggins Trucking Inc.,
757 F.2d 557, 571 (3rd Cir. 1985) (en banc)).
Although Revels was intimately invo lved in DCPM’s
activities, he was never made a target of the c o ntempt
proc e e dings: he was deliberately excluded from Treadwell’s
initial motion, and Treadwell never subsequently moved to
include him, e ve n after his testimony evinced potentially
contemptuous behavio r. As a result, Revels never obtained
c o unsel (or otherwise sought to defend himself within the
proceedings) or received a separate hearing. We do not question
a district court’s ability, in c e r tain circumstances, to issue
findings of contempt sua sponte. See, e.g., In re Grand Jury
Proceedings, 795 F.2d at 234 (“There is general agreement that
due process requires that a potential contemnor be given notice
and a hearing regardless of whether the contempt is civil or
criminal in nature, unless the contempt is committed in open
court and tends to ‘demoralize’ the court’s authority, in which
cas e punishment can be imposed summarily.” (citing inter alia
In re Oliver, 333 U.S. 257, 274 (1948) (noting that “courts have
28
long exercised a power summarily to punish certain conduct
committed in open court without notice, testimony or hearing”)).
However, on the facts of this case, it was inappropriate to hold
Revels in contempt without notice and a hearing.11
D.
Finally, we addres s the issue of remedies. In its
September 7, 2007 Liability Opinio n discussed above, the
District Court did not address the is s ue of remedies – the
decision held Appellants in contempt, but r emained silent on
damages. Fo llowing the entry of the decision on liability,
11
Appellees cite two cases, Chambers v. NASCO, Inc.,
501 U.S. 32 (1991) and Helmac Products Corp. v. Roth Plastics
Corp., 150 F.R.D. 563, 569 (E.D. Mich. 1993), which speak to
the wide contempt powers of a district court. In both Chambers
and Helmac, however, the non-parties held in contempt received
notice and a hearing, unlike Revels in the i ns tant case.
Chambers, 501 U.S. at 57 (“As long as a party receive s an
appr o pr iate hearing, as did Chambers, the party may be
sanctioned for abuses of process occur r ing beyond the
courtroom, suc h as disobeying the court’s orders.” (internal
citatio n omitted)); Helmac, 150 F.R.D. at 569 (noting that the
court “will provide [the non-party accused of contempt] with the
opportunity to testify or provide o the r witnesses at an
evidentiary hearing that focuses on his role in the document
destruction process and the appropriateness of sanctions against
him.”) . Accordingly, these cases – if anything – support the
position that a contempt violation may not issue against Revels
without notice and a hearing.
29
Treadwell s ubmitted a draft order to the District Court
recommending a full accounting, treble damages, attorneys’ fees
and costs, and an inclus ion of Live Gold Operations (DCPM’s
new name) as a defendant. Appellants responded by informing
the Court that they wished to move for reconsideratio n of the
merits of the liability opinion, and thus requested that the Court
hold off on entering any supplementary order on remedies until
the reconsideration motion had been decided. They f ile d this
reconsideration motion on Se pte mber 20, 2007. The District
Court apparently rejected Appe llants’ request, however, as it
signed the proposed supplementary order on September 25,
2007 (“Supplementary Order”) without a hearing or a
substantive response by Appe llants. Appellants promptly
amended their mo tion to request reconsideration of both the
Se pte mber 4, 2007 Order and Opinion and the September 2 5 ,
2007 Supplementary Order.
On February 13, 200 8 , the District Court issued its
Reconsideration Opinion. Marshak, 2008 WL 413312. This
Opinion, as noted above, acknowledged certain factual mistakes
regarding the timing of the formation of DCPM, but stated that
those errors did not affect the court’s controlling findings and
conclusions of law as expressed in the September 7, 2007
Opinion and Order. Id. at *4 . Ac c o r dingly, the liability
portions of the court’s September 7, 2007 Opinion and Order
were left undisturbed. The District Court did, however, use the
Reconsideration Opinion as an opportunity to alter the remedies
provided for in the September 25, 2007 Supplementary Order.
The court acknowledged that the Supplementary Order had been
entered without a hearing or a formal response from Appellants,
and thus treate d the portion of the reconsideration motion
30
addressing remedies as a “full scale opposition” to the relief
accorded by the Supplementary Order, brushing away “the usual
limitations imposed upon a motion for reconsideration.” Id. at
*9. In a sense, the court wound back the c lo c k, and
contemplated anew the issue of remedie s as if the
Supplementary Order had never been issued.
Reassessing the issue of remedies, the court removed the
mandated accounting and treble damages, leaving in place only
the attorneys’ fees. Although the District Court acknowledged
that certain factors supported an accounting of profits, it decided
against imposing such a remedy. The District Court was less
equivocal in its decision to remove the treble damages, stating
that treble damages would be an “unjustified windfall” for
Treadwell, and would not have been appropriate e ve n if an
accounting had been o r de r e d. Id. at *8. The only remedy left
standing was the attorneys’ fees, which the c o urt deemed
justified to cover Treadwell’s costs in securing the adjudication
of contempt.
As in our discussion of the District Court’s decision on
liability, we review the sanctions imposed by the District Court
for abuse of discretion. Robin Woods Inc. v. W oods, 28 F.3d
396, 399 (3d Cir. 1994) (“‘The standard of our review of a
district court sanction for civil contempt is whether the district
court abused its wide discretion in fashioning a remedy.’”
(quoting Del. Valley Citizens’ Council v. Pennsylvania, 678
F.2d 470, 478 (3d Cir. 1982))). Here, however, we find that the
District Court did abuse its discretion in refusing to impose any
remedy other than attorneys’ fees.
“Sanctions for civil contempt serve two purpo s es: ‘to
31
coerce the defendant into compliance with the court’s order and
to compensate for losses sustained by the disobedience.’” Robin
Woods, 28 F.3d at 400 (quoting M c Donald’s Corp. v. Victory
Invs., 727 F.2d 82, 87 (3d Cir. 1984)). “Compensatory awards
seek to ensure that the innocent party gets the benefit of the
injunction . . . .” Id.In the original iteration of this case, Judge Politan
ordered fairly substantial remedies. After holding that Marshak
had violated Treadwell’s common law rights , see Marshak, 58
F. Supp. 2d 551, Judge P olitan issued a separate order on
remedies, holding that Marshak’s infringe me nt warranted a
comprehensive injunction, a full accounting of profits, and
re as o nable attorneys’ fees, Marshak, No. 95-CV-3794 (D.N.J.
Aug. 16, 1999). These r e me dies comported with the relevant
provisions of the Lanham Act: subject to “the principles of
equity,” Treadwell was entitled to recover Marshak’s profits,
any damages she suffered, the costs of the action, and, upon a
s ho wing of exceptional circumstances, attorneys’ fees. 1 5
U.S.C. § 1117(a) (detailing remedies available to plaintif f s
establishing violations under 15 U.S.C. § 1125(a)).12
12
On appeal, Marshak c hallenged both Judge Politan’s
decision on liability as well as the remedies he imposed. We
subsequently upheld the merits of Judge Politan’s liability
decision, but declined to review the supplemental order
mandating the full accounting. Writing for the Court, Judge
Alito stated that review of the order of accounting would be
outside the scope of our jurisdiction, as the damages in question
were insufficiently specific to amount to a final dec ision.
Marshak, 240 F.3d at 190-91 (noting that while appellate review
32
Nearly a decade later, the same parties were back in court
– this time in f r o nt o f J udge Debevoise. We have already
addressed in detail what happened in the years between Judge
Politan’s injunction and Judge Debevoise’s finding of contempt:
Marshak’s family members and associates continued engaging
in essentially the same business that they operated prior to the
injunction, only this time without Marshak as the acknowledged
ringleader. The District Court summe d up their behavior
succinctly in its Liability Opinion:
Marshak, the Motion Respondents,
and Davis have violated the letter,
as well as the spirit and intent, of
J udge Politan's injunc tio n by
engaging in an elaborate shell game
through their creation of various
business identities in an attempt to
deceive Treadwell and the Cour t.
All of t hem were aware of the
injunc tio n, but all o f them
benefitted financially from their
violation of the injunction because
The Coasters, The Platters, and The
is available in the case of an order that “is not technically final
but resolves all issues that are not purely ministerial, the
accounting at issue in this case does not come within that rule”
(internal citations omitted)). We noted that consideration of the
propriety of the r emedies chosen by Judge Politan would have
to await the completion of the accounting of profits – which, as
we note later in this Opinion, apparently never occurred.
33
Drifters, when packaged together,
make more money for them. Prior
to the injunction The Drifters, The
Co as t e r s , and The P l at te r s
per f o r med at the Sahara in Las
Vegas through the efforts of
M ars hak and th e s e r vants,
e mplo ye e s , a n d a g e n ts o f
Marshak’s company, RCI-Andrea,
Paula, Revels, Mehlich, and Davis.
After the injunc tion, The Elsbeary
Hobbs Drifters resumed performing
with The Coasters and The Platters
at the Las Vegas Sahar a, through
the active efforts of Marshak,
Andrea, Paula, Revels, Mehlich,
and Davis . Each of them has
continued to sell, promote and
advertise The Drifters through their
own company, DCPM, and through
the company formed exclusively
for this purpose by Barry Singer
and Mehlich, Singer Management.
Their efforts continued after the
Court of Appeals affirmed the
District Court’s order, in spite of
their declarations to the contrary.
Marshak, 2007 WL 268 7454, at *15. Despite laying out the
evidence of this infringing conduc t – and describing it as an
34
“elaborate shell game” crafted to e vade the injunction – the
District Court imposed remedies far less severe than those
issued by Judge Politan. Marshak and his associates were
s anc tioned for violating the court’s injunction, but were
permitted by the court to keep whatever profits they gained as a
result of their disregard for Judge Politan’s injunction. This, we
believe, was an abuse of discretion.
The District Court offered two reasons for declining to
impose an accounting of profits: first, because Treadwell had
not established that she suffered actual damages, and second,
and “more important[ly],” because Treadwell waited five years
before commenc ing the contempt action. Marshak, 2008 WL
413312, at *9. We will address these reasons in turn.
We have held that an accounting of an infringer’s profits
is available “if the defendant is unjustly enriched, if the plaintiff
has sustained damages, or if an accounting is necessary to deter
infringement.” Banjo Buddies, Inc. v. Renosky, 399 F.3d 168,
177-78 (3d Cir. 2005) (emphasis added). In so holding, we have
emphasized the “or” in this construction – noting that because
“[t]hese rationales are stated disjunctively; any one will do.” Id.
at 178. Accordingly, Treadwell did not need to establish actual
damages to justify the imposition of an accounting of profits 13
– she needed only to show that an accounting was necessary to
deter infringeme nt or that Marshak and his associates were
13
Altho ugh the District Court said the lack of proven
damages “weigh[ed] heavily” against Treadwell, it also
acknowledged that Treadwell was “not r e quired to show actual
harm.” Marshak, 2008 WL 413312, at *8-9.
35
unjustly enriched. We think Treadwe ll easily satisfies this
standard.
The record and the Dis trict Court’s opinion are quite
clear that the initial injunction and accompanying remedies did
not deter the subsequent infringement by Marshak and his
associates. To the contrary, to quote the Dis tr ic t Court,
Appellants engaged in an “elaborate shell game” to e vade the
restrictions of the injunction, and continue d o pe r ating as they
did prior to the court order. Marshak, 2 0 0 7 WL 2687454, at
*15; see Harley-Davison, 19 F.3d at 148-49 (noting that intent
and wilfulness are not necessary elements of civil contempt, but
are relevant regarding the extent of the sanction to be imposed).
Given that the injunction imposed by Judge Politan did not have
the desired effect, and given that the District Court made
specific findings attesting to Appellants’ efforts to avoid that
injunction, we see little basis for limiting Treadwell’s remedies
to the imposition of attorneys’ fees. See Banjo Buddies, 399
F.3d at 1 7 8 ( no ting that permitting an infringer to retain the
profits from his or her infringement would not s e r ve the
congressional purpose of making infringement unprofitable).
We believe that limiting Treadwe ll’s remedies to mere
attorneys’ fees would resul t in the perversity of imposing less
demanding remedies on Appellants after the finding of contempt
than were imposed before the finding of contempt. Compare
Marshak, No . 95-CV-3794 (D.N.J. Aug. 16, 1999) (imposing
injunction, accounting of profits, and attorneys’ fees fo r
Marshak’s infringement of Treadwell’s marks) with Marshak,
2 0 0 8 WL 413312 (imposing attorneys’ fees for violation o f
previous injunction). Moreover, to the extent that Appellants
argue that such an accounting would result in a windfall for
36
Treadwell, we believe it to be mo re equitable that Treadwell,
rather than Marshak and his associate s , receive the benefits of
the infringement. See Banjo Buddies, 399 F.3d at 178 (“Even
if Banjo Buddies receives a windfall in this case . . . it is
preferable that Banjo Buddies rather than Renosky r e c eive the
benefits of Renosky’s infringement.”). The principles of
deterrence would not be served by perm itting Marshak and his
associates to keep the fruits of their conte mpt when they have
evaded the injunction for more than half a decade.
The District Court’s second basis for denying an
accounting – the “more important” reason – was that Treadwell
waited five years before c o mme ncing her action, despite
kno wing that Marshak and his associates were using the
Els beary Hobbs Drifters trademark during the time perio d
following the injunction. Marshak, 2008 WL 413312, at *9.
The District Court he ld that this “inordinate delay” barred her
from entitlement to an accounting of profits. Id.14
14
Appellants also argued that the District Court should
have barred the claim under the equitable do c trine of laches.
“Laches bars an action from proceeding if the r e was (1) an
inexcusable delay in bringing suit, and (2) material prejudice to
the defendant as a result of the delay.” Joint Stock Soc. v. UDV
N. Am., Inc., 266 F.3d 164, 18 5 n.1 2 (3d Cir. 2001) (citing
Pappan Enter. v. Hardee’s Food Sys., 143 F.3d 800, 804 (3d Cir.
1998)). As noted by the District Court, Appellants never made
any real effort to show prejudice – at best, they merely
demonstrate d a de lay – and we do not find that delay
inexcusable.
37
The only authority prese nted by the District Court to
support this holding is University of Pittsburgh v. Champion
Prods., Inc., 686 F.2d 1040, 1044-45 (3d Cir. 1982). In
University of Pittsburgh, the University sued Champion
Produc ts , a manufacturer of athletic apparel, for trademark
infringement. Id. at 1041. Champion presented the affirmative
defense of laches, arguing that because Champion had been
marketing clothing with the University of Pittsbur gh logo for
nearly fifty years, the University of Pittsburgh should have been
estopped from proceeding on its claim. Although we reversed
the district court’s decision to apply laches, we held that the
district court did not abuse its discretion in barr ing an
accounting of profits for past infringement. Id. at 1045-46. In
so doing, we analogized the fact patte r n of University of
Pittsburgh to the “common situation in which the plaintiff’s less
egregio us delay will bar its claim for accounting for past
infringement but no t for prospective injunctive relief.” Id. at
1044.
The case before us is re adily distinguishable from
University of Pittsburgh. The defendant in University of
Pittsburgh, Champion P r o ducts, was not violating a previously
imposed injunction. To the contrary, Champion had been using
the University’s name and logo for nearly fifty ye ar s , and had
sold its products in the University’s bookstore with the
University’s consent. Id. at 1043. We af f ir med that the
accounting of profits was not warranted, as the Unive r sity had
essentially acquiesced to Champion’s commercial activities for
nearly a half-century. Id. at 1045-46. The case before us here
is far different. Treadwell did no t c o ns e nt to the present
infringement – to the contrary, she has approached us seeking to
38
enforce a injunction that she had pr eviously pursued and been
granted. The long and tortured history of this case attests to the
fact that Treadwell has not acquiesced to Marshak’s activitie s .
Given the progress of this cas e , Appellants cannot argue that
they relied on some right to violate the injunction, nor that they
were prejudic ed for being permitted to violate the injunction
longer than expected.
Appellants make much of the five year delay between our
affirmance of Judge Politan’s injunction and Treadwell’s
initiation of contempt proceedings (a span of time one-tenth the
length of the delay in University of Pittsburgh). W hile
Appellants may be correct in stating that Treadwell did not need
to wait until Marshak’s bankruptcy proceedings were r e s o lved
to move for an order of contempt, we do not think her choice to
do so was “inordinate” or inexcusable, particularly in light of the
prior history of this case. As noted above, the original
injunction imposed by Judge Politan was itself accompanied by
an order of accounting. Our review of the record, however,
indicate s that the order of accounting was never satisfied.
Treadwell states that the order of accounting was rendered
utter ly ineffective by Marshak’s subsequent bankruptcy
proceedings, which did not become final until July 14, 2 006,
some four and a half years after the injunction was issued.
Appellants do not contest Treadwell’s version of the facts
surrounding M ar s hak’s bankruptcy, and we see nothing in the
record to indicate that the accounting was ever satisfied.15 We
15
On July 12, 2001, Magistr ate Judge Ronald Hedges
signed a case management order directing Marshak to turn over
all relevant financial documents for the order of accounting by
39
July 20, 2001. (No. 95-CV-3794, Dkt. No. 179.) On August 21,
2001, Treadwell submitte d an af f idavit f r o m Yskla
Adaikia’hanna, stating that the documents submitted by
Marshak were inadequate for determining the profits earned by
Marshak from The Drifters mark dur ing the relevant time
period. (No. 95-CV-3794, Dkt. No. 180.) A second case
management order was then s igne d on September 6, 2001,
which set a status conference for November 15, 2001. (No. 95-
CV-3794, Dkt. No. 181.) A revised sec o nd case management
order then issued on October 5, 2001, s e tting a hearing for
November 5, 2001 on the issue of attorneys’ fees. (No. 95-CV-
3794, Dkt. No. 185.) However, before either conference took
place, Marshak filed for bankruptcy on or abo ut October 22,
2001. The case was administratively terminated sho r tly
thereafter. (No. 95-CV-3794, Dkt. Nos. 186-87.)
Treadwell’s first filing in the contempt proceeding before
Judge Debevoise stated the following:
On or about October 22, 2001, in
an apparent attempt to avoid an
accounting and an assessment of
damages, Marshak filed a voluntary
pe titio n f o r Chapte r Se ve n
bankruptcy in the Eastern District
of New York. As a result, Marshak
avoided paying Treadwell unto ld
damages illegally e ar ned by him
between 1970 and 2001.
40
do not think it inexcusable for Treadwell to wait for the
resolution of the bankruptcy proceedings – and thus the
disposition of the previous order of accounting – before
addressing the second wave of infringement through a contempt
proceeding.
For the aforementioned reasons , we will remand for an
order of accounting. We leave undis tur bed the award of
attorneys’ fees. We express no opinion on the propriety of
treble damages, but instead leave that issue to the sound
discretion of the District Court.
III.
For the foregoing reasons, we affirm the District Court’s
finding of contempt against Marshak, Andrea Marshak, Paula
Marshak, Mehlich, Davis, Singer, Singer Management, DCPM,
and Cal-Cap, but reverse as to Revels. We affirm the award of
attorneys’ fees but remand for an order of accounting.
(No. 95-CV-3794, Dkt. No. 188). Marshak never rebutted this
account.
41