Eastern Property Development LLC et al v. Gill

Filing 139

ORDER denying 118 Motion for Attorney Fees; denying 122 Motion for Remittitur. Ordered by Judge Clay D. Land on 12/12/2012. (CGC)

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION EASTERN PROPERTY DEVELOPMENT, LLC and SOUTH EAST ENTERPRISE GROUP, LLC, * * Plaintiffs, * CASE NO. 4:11-CV-62 (CDL) vs. * LOREN GILL, * Defendant. * O R D E R The jury returned a verdict in favor of Plaintiffs Eastern Property Development, LLC and South East Enterprise Group, LLC (“Plaintiffs”) Plaintiffs’ and against trespass, Defendant conversion, Loren and Gill (“Gill”) interference on with contractual relations claims, awarding Plaintiffs $35,335.98 in compensatory damages and $250,000.00 in punitive damages. Gill contends that the punitive damages award was unconstitutionally excessive and has filed a motion to reduce it to match the compensatory damages award (ECF No. 122). For the reasons set forth below, the motion is denied. Also pending before the Court is Plaintiffs’ Motion for Attorneys’ Fees under § 35 of the Lanham Act, 15 U.S.C. § 1117 (ECF No. 118). interference In addition to their trespass, conversion, and with contractual relations claims, Plaintiffs pursued a trade name infringement claim under § 43 of the Lanham Act, 15 U.S.C. § Plaintiffs 1125. failed to The prove Court previously found that on trade name damages their infringement claim, and the Court declined to submit that issue to the jury. The Court noted, however, that it would determine after trial whether Plaintiffs are entitled to attorneys’ fees on their trade name infringement claim. As discussed below, Plaintiffs’ motion for attorneys’ fees is denied. I. Gill’s Motion for Remittitur of Punitive Damages Award The jury’s punitive damages award of $250,000.00 is roughly seven times the compensatory damages award of $35,335.98. It is beyond dispute that “‘[p]unitive damages may properly be imposed to further a State’s legitimate interests in punishing unlawful conduct and deterring its repetition.’” Cont’l Carbon Inc., 481 F.3d Action Marine, Inc. v. 1302, 1317-18 (11th Cir. 2007) (quoting BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 568 (1996)). However, it is equally clear that “[t]he Due Process Clause of the Fourteenth Amendment prohibits the imposition excessive or arbitrary punishments on a tortfeasor.” Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, of grossly State Farm 416 (2003). Defendants’ motion requires the Court to determine whether the award in this case is so excessive or arbitrary that it cannot pass constitutional muster. 2 Having conducted the trial in this action, the Court cannot conclude from the evidence presented that the punitive damages award is grossly excessive in relation to the state’s legitimate interest in punishing the conduct engaged in by the Defendant and deterring similar conduct. The Court also cannot conclude that the punitive damages award is so disproportionate to the amount of reduced. compensatory damages recovered that it must be The evidence presented at trial supports the jury’s conclusion that Gill’s conduct was sufficiently reprehensible to warrant the imposition of $250,000 in punitive damages. The Court acknowledges that the 7-to-1 ratio awarded by the jury is higher than the 4-to-1 ratio that has been endorsed by the Supreme Court, see Campbell, 538 U.S. at 425; however, the Court also understands that an evaluation of the excessiveness of a punitive damages award cannot be “reduced to a simple mathematical formula,” Action Marine, 481 F.3d at 1321 (internal quotation marks omitted). The evidence in this case supported a finding by the jury that Gill busted into Plaintiffs’ offices, took over their operations, disrupted interfered with their employees provable monetary damages their and tenants. ultimately suffered business, and The amount of by understates the egregiousness of Defendant’s conduct. Plaintiffs Moreover, due to the fact that the Court issued a preliminary injunction preventing further similar conduct during the pendency of the 3 action, Plaintiffs’ compensatory damages were mitigated notwithstanding the fact that Gill violated that injunction on one occasion. The evidence presented at trial supported the punitive damages award, and under the specific circumstances of this case, the Court cannot conclude that the excessive to the point of being unconstitutional. award was To reduce the award would be tantamount to an arbitrary substitution of this Court’s judgment for the collective wisdom of Plaintiffs’ peers who sat on his jury. While the Court has the obligation to conduct an independent review of the constitutionality of the award, the Court is not authorized to reduce it arbitrarily. Based on the Court’s review, Gill’s motion for remittitur must be denied. II. Plaintiffs’ Motion for Attorneys’ Fees Plaintiffs seek attorneys fees based on their claim that Gill infringed their trade name, South East Enterprise Group, LLC, in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Specifically, protected Group, interest LLC, and metropolitan area in Plaintiffs the that trade consumers associate that contend name in name that South the with they East have a Enterprise Columbus, Georgia Plaintiffs’ real estate rental services. Plaintiffs further assert that it was trade for name infringement Gill to form a company called Southeastern Enterprise Group, LLC, open a bank account in that 4 company’s name, and send correspondence to Plaintiffs’ tenants instructing them to remit their rent payments to Gill’s newly formed company. When Plaintiffs filed this action, they sought, and the Court granted, a preliminary injunction enjoining Gill from “holding himself out as working for, acting for, or speaking on behalf of either Eastern Property Development or South East Enterprise or any other name that, because of its similarity to those two names, is confusingly similar.” Preliminary Injunction 2, ECF No. 14. that once the Court granted their Order Granting Plaintiffs acknowledge motion for preliminary injunction on June 28, 2011, Gill stopped using the name South Eastern Enterprise Group, LLC. entitled to attorneys’ Plaintiffs contend that they are fees for the period before the preliminary injunction was entered. Under exceptional § 35(a) cases may of the award Lanham Act, reasonable “[t]he attorney court fees to in the prevailing party” in an action under § 43(a) of the Lanham Act. 15 U.S.C. § 1117(a) (emphasis added). further defined exceptional, the “While Congress has not legislative history of the [Lanham] Act suggests that exceptional cases are those where the infringing party acts in a malicious, fraudulent, deliberate, or willful manner. Burger King Corp. v. Pilgrim’s Pride Corp., 15 F.3d (11th 166, 168 Cir. 1994) 5 (internal quotation marks omitted); accord Lipscher v. LRP Publ’ns, Inc., 266 F.3d 1305, 1320 (2001) (concluding that the correct exceptionality is fraud or bad faith). rise to the level of exceptionality, standard for “Although a case may the decision to grant attorney fees remains within the discretion of the trial court.” Burger King Corp., 15 F.3d at 168. In this case, the record is devoid of sufficient facts for the Court to conclude that Plaintiffs are the prevailing parties on their Lanham Act claim. Plaintiffs acknowledge that their trade name, South East Enterprise Group, is merely descriptive and is thus not entitled to trade name protection unless it has acquired secondary meaning. See Tana v. Dantanna’s, 611 F.3d 767, 774 (11th Cir. 2010) (discussing requirements for trademark validity). “A name has acquired secondary meaning when the primary significance of the term in the minds of the consuming public is not the product but the producer.” quotation claim marks seemed omitted). to be an At trial, afterthought. Id. (internal Plaintiffs’ Lanham Plaintiffs Act failed to present sufficient evidence that the name “South East Enterprise Group” has attained secondary meaning. not hold Enterprise today that Group, has Plaintiffs’ not attained Although the Court does trade name, secondary South meaning East and is therefore not a protectable trade name, the Court does conclude that Plaintiffs failed to meet 6 their burden of establishing secondary meaning at trial. Accordingly, the Court finds that Plaintiffs are not the “prevailing party” within the meaning of § 35(a) of the Lanham Act, and Plaintiff’s Motion for Attorneys’ Fees is therefore denied. CONCLUSION As discussed above, Gill’s motion to reduce the punitive damages award (ECF No. 122) is denied, as is Plaintiffs’ Motion for Attorneys’ Fees under § 15 U.S.C. § 1117 (ECF No. 118). 35 of the Lanham Act, The Court previously stayed collection of the judgment pending its ruling on Gill’s motion to reduce the judgment. That stay is now lifted. IT IS SO ORDERED, this 12th day of December, 2012. S/Clay D. Land CLAY D. LAND UNITED STATES DISTRICT JUDGE 7

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