Luxottica Retail North America Inc. v. George L. Haffner Enterprises, Inc. et al
Filing
28
PERMANENT INJUNCTION and ORDER granting in part 25 --motion for default judgment; directing the Clerk to ENTER JUDGMENT (1) for the plaintiff and against the defendants George Haffner Enterprises, Inc., George Haffner, and Gail Mabry, jointly and severally, for $72,577.16 and (2) for the plaintiff and against the defendants George Haffner Enterprises, Inc., and George Haffner, jointly and severally, for $7,925.83. Signed by Judge Steven D. Merryday on 4/23/2012. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LUXOTTICA RETAIL NORTH
AMERICA, INC., d/b/a PEARLE
VISION,
Plaintiff,
v.
CASE NO.: 8:11-cv-2433-T-23TBM
GEORGE L. HAFFNER
ENTERPRISES, INC., GEORGE L.
HAFFNER and GAIL MABRY,
Defendants.
__________________________________/
ORDER
Seeking money damages and injunctive relief, Pearle Vision sues (Doc. 1) for
breach of contract, trademark infringement, and unfair competition. The defendants
default (Docs. 16, 20, 21), and the plaintiff moves (Doc. 25) for a default judgment, a
permanent injunction, attorney fees, and costs.
By virtue of default, the defendants admit the allegations of the complaint.
George L. Haffner Enterprises, Inc. (the “Corporation”), George L. Haffner, and
Gail Mabry owned and operated a Pearle Vision store in Citrus Park (store #8455,
“PV Citrus Park”) and the Corporation and Haffner owned and operated a Pearle
Vision Store in New Tampa (store #8422, “PV New Tampa”).
PV New Tampa operated until the contractual expiration of the franchise on
June 30, 2011. The contract contained a restrictive covenant that prevented the
defendants for one year after June 30, 2011, from “engag[ing] in any other retail
optical business” within three miles of the store. Nonetheless, immediately after the
expiration of the franchise, the Corporation and Haffner opened the “New Tampa
Vision Center” on the premises of the former PV New Tampa.
At the same time, on July 1, 2011, each defendant closed and abandoned PV
Citrus Park without permission from Pearle Vision. The PV Citrus Park franchise
contractually expired April 2, 2013. On the storefront the defendants left a sign,
which read:
Your Optical records as well as Dr. Bickoff’s medical records will be
transferred to our location at 19410 Bruce B Downs Blvd. Tampa, Fl.
33647 [the New Tampa Vision Center].
...
You can reach us at the following numbers:
Store # - [813-XXX-XXXX]
Dr. Bickoff # - [813-XXX-XXXX]
(Doc. 26-1, at 9) An August 30th letter from Pearle Vision contractually defaulted the
defendants and terminated PV Citrus Park’s franchise. Nonetheless, the defendants
left outside the abandoned store a marquee displaying Pearle Vision’s trademark.
I. Damages Available to Pearle Vision
First, Pearle Vision seeks (1) $7,925.83 due from before the expiration of the
PV New Tampa franchise agreement and (2) $6,699.22 due from before the
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termination of the PV Citrus Park franchise agreement. Pearle Vision submits (Doc.
25-7) an itemized statement of royalties, merchandise, and advertising.
Second, for lost profit for the early termination of PV Citrus Park, Pearle
Vision seeks expectation damages of $38,509, which equals the royalty payment for
the first six months of 2011 (until the July 1, 2011, abandonment) applied through
April 2, 2013, the day of the franchise’s contractual expiration. (Doc. 25-5)
Third, supported by a declaration of counsel (Doc. 25-8) accompanied by a
detailed accounting and a bill of costs, Pearle Vision seeks $26,643.94 in attorney fees
and $725 in costs.
II. Damages Under the Lanham Act
Under the Lanham Act, 15 U.S.C. §§ 1051-1141n, Pearle Vision seeks
$129,023, which purportedly equals the defendants’ profit from trademark
infringement at the abandoned store. The Lanham Act entitles a successful plaintiff
to “(1) [the] defendant’s profits, (2) any damages sustained by the plaintiff, and
(3) the costs of the action.” 15 U.S.C. § 1117(a); Babbit Electronics, Inc. v. Dynascan
Corp., 38 F.3d 1161, 1182 (11th Cir. 1994) (“This recovery is cumulative, that is, the
Court may award [the plaintiff] both its damages and [the defendant’s] profit[].”); see
also Ramada Inns, Inc. v. Gadsden Motel Co., 804 F.2d 1562 (11th Cir. 1987) (permitting
a franchisor to recover from a franchisee (1) liquidated damages for breach of
contract and (2) the franchisee’s profit from trademark infringement occurring after
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terminating the franchise agreement that granted the franchisee permission to use the
mark).
Section 1117(a) requires Pearle Vision to prove the defendants’ sales revenue
and the defendants to prove each expense or cost the defendants seek to deduct.
Attempting to calculate the abandoned store’s sales revenue between September 1,
2011, and January 31, 2012, Pearle Vision derives PV Citrus Park’s historical sales
revenue (from when the store was operating) and applies the number through
January 30, 2012 (as if the store continued to operate).
Because “‘a markholder is only entitled to those profits attributable to the
unlawful use of its mark,’” this method of calculation fails. Quick Technologies, Inc. v.
Sage Group PLC, 313 F.3d 338, 349-50 (5th Cir. 2002) (quoting Pebble Beach Co. v. Tour
18 I Ltd., 155 F.3d 526 541 (5th Cir. 1998), abrogated on other grounds by TrafFix
Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 32-33 (2001)). The alleged
trademark infringement necessarily occurred, if at all (if not conducting business at a
site infringes), only after PV Citrus Park closed, and, consequently, the defendants
realized no profit attributable to the supposed infringement because the defendants
realized no profit at the abandoned store from September 1, 2011, to January 31,
2012. Conceivably, the infringement, if any, might have created a bit of profit if the
defendant realized sales revenue at the New Tampa Vision Center from a customer
attracted to the abandoned store by the infringing Pearle Vision marquee but diverted
to the New Tampa Vision Center by the little, printed sign in the window of the
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abandoned store. This implausible diversion of business from the west side of the
Tampa area to the east side of the Tampa area (past a formidable array of aggressive
competing businesses) is either infinitesimal or, more likely, non-existent. Either way,
Pearle Vision submits no evidence of diversion.
III. Damages for Breach of the Restrictive Covenant
Permitting an award of damages for breach of a restrictive covenant, Section
542.335(1)(j), Florida Statutes, states, “[a] court shall enforce a restrictive covenant
by any appropriate and effective remedy, including, but not limited to, temporary and
permanent injunctions.” The profit lost as a result of the breach measures the
damages for a breach of a restrictive covenant:
To recover damages for lost profits in a breach of contract action, a
party must prove a breach of contract, that the party actually
sustained a loss as a proximate result of that breach, that the loss
was or should have been within the reasonable contemplation of
the parties, and that the loss alleged was not remote, contingent, or
conjectural and the damages were reasonably certain.
Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223, 1242 (11th Cir. 2009) (quoting Frenz
Enterprises, Inc. v. Port Everglades, 746 So.2d 498, 504 (Fla. 4th DCA 1999)); accord
Mnemonics, Inc. v. Max Davis Assocs., Inc., 808 So.2d 1278, 1280 (Fla. 5th DCA 2009).
Because of the inherent difficulty in determining the profit, if any, lost as a result of a
breach of a restrictive covenant, an injunction is the favored judicial remedy.
Proudfoot, 576 F.3d at 1243 (quoting Capraro v. Lanier Bus. Prods., Inc., 466 So.2d 212,
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213 (Fla. 1985)). Thus, “many restrictive covenants have liquidated damages
clauses.” Proudfoot, 576 F.3d at 1243 n.23.
Pearle Vision demands $9,445, which equals the royalty payment at PV New
Tampa for the twelve months before the June 30, 2011, franchise expiration applied
through January 31, 2012. (Doc. 25-5) Thus, Pearle Vision compares the royalties
received from New Tampa Vision Center ($0) to the royalties attainable from the
continued operation of PV New Tampa ($9,445). Similar to PV Citrus Park, Pearle
Vision seeks expectation damages – “[c]ompensation awarded for the loss of what a
person reasonably anticipated from a transaction that was not completed.” BLACK’S
LAW DICTIONARY 163 (pocket ed. 1996).
This breach does not entitle Pearle Vision to expectation damages. Unlike PV
Citrus Park, the PV New Tampa franchise expired. Thus, unlike PV Citrus Park
where Pearl Vision had a reasonable expectation of royalties until the April 2, 2013,
franchise expiration, Pearl Vision had no reasonable expectation of royalties from PV
New Tampa after the June 30th franchise expiration.
Consequently, Pearle Vision is entitled only to the profit lost at some other
Pearle Vision caused by the unlawful operation of the New Tampa Vision Center.
For example, Pearl Vision could subtract royalties, if provable, gained from a nearby
store for a stated time after June 30th from royalties gained from the nearby store for
a stated time before June 30th. Assuming that customers fled the nearby Pearle
Vision store for the New Tampa Vision Center, the difference in royalties would be a
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reasonable approximation of lost profit caused by New Tampa Vision Center’s
operation. Pearle Vision fails to produce evidence of lost profit resulting directly from
the breach of the restrictive covenant. Nonetheless, an injunction is available. Fla.
Stat. § 542.335(1)(j).
IV. Conclusion and Injunction
The motion for a default judgment (Doc. 25) is GRANTED IN PART.
Owning and operating only PV Citrus Park, the defendant Gail Mabry is responsible
only for the damages resulting from the violations at PV Citrus Park. The clerk shall
enter judgment (1) for the plaintiff and against the defendants George Haffner
Enterprises, Inc., George Haffner, and Gail Mabry, jointly and severally, for
$72,577.16 and (2) for the plaintiff and against the defendants George Haffner
Enterprises, Inc., and George Haffner, jointly and severally, for $7,925.83.
George L. Haffner Enterprises, Inc., George L. Haffner, and Gail Mabry are
PERMANENTLY ENJOINED and shall:
(1) remove from the premises of the former PV Citrus Park each sign, banner,
label, packaging, advertising, promotion, display, and “point-of-purchase” material
that bears or displays a Pearle Vision trademark, name, symbol, or slogan;
(2) transfer to Pearle Vision each telephone number, fax number, and directory
listing for both PV Citrus Park and PV New Tampa;
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(3) return to Pearl Vision any Pearle Vision material containing a Pearle Vision
trade secret or proprietary information, including the franchise manual and
proprietary inventory;
(4) not, for one year from the date of this order, operate or participate in a retail
optical store or optometric office within a radius of three miles from the former PV
Citrus Park;
(5) provide to Pearle Vision (to the extent permitted by law) a copy of each
record of optical service provided at PV Citrus Park.
Additionally, George L. Haffner Enterprises, Inc., and George L. Haffner are
PERMANENTLY ENJOINED and shall:
(1) not, for one year from the date of this order, operate or participate in a retail
optical store or optometric office within a radius of three miles from the former PV
New Tampa;
(2) provide to Pearle Vision (to the extent permitted by law) a copy of each
record of optical service provided at PV New Tampa.
ORDERED in Tampa, Florida, on April 23, 2012.
Steven D. Merryday
_________________________________
STEVEN D. MERRYDAY
UNITED STATES DISTRICT JUDGE
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