Opposition Brief — Getty Petroleum Corp. v. Bartco Petroleum Corp.

; Supreme Court, USe:.

6) FILED |

\ MAR & 1998

SIASEPHEE. SPANIOL, JR,

CLERK

No. 88-1335

IN THE

Supreme Court of the United States

OcrToBER TERM, 1988

GETTY PETROLEUM CORP.,

a Petitioner,

— against —

BARTCO PETROLEUM CORP.,

NICHOLAS J. BARTOLOMEO,

ANTHONY GOLIO,

Respondents.

RESPONDENTS’ BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

RALPH PERNICK*

CuiFForD J. CHu

Hayt, Hayt & LANDAU

600 Northern Boulevard

Great Neck, New York 11021

(516) 466-5800

*Counsel of Record

ow

TABLE OF CONTENTS

Statement Pursuant to Rule 28.1 of this Court ...

pe eee TELS ree eee

eee

eee ee eran ene

1. Petitioner's Argument Based Upon

Fed.R.Civ.P. 51 Should Be Rejected .......

2. Petitioner’s Argument Based Upon

Fed.R.Civ.P. 49(a) Should be Rejected .....

3. On the Merits, the Second Circuit’s Decision

that Punitive Damages Are Not Available

Under the Lanham Act Is Consistent with

the Statutory Language, Legislative History

and with All Other Courts of Appeal that

Have Considered this Issue................

I So Oe eee Oe a hee ee id tae,

Page

~

ii

STATEMENT PURSUANT TO

RULE 28.1 OF THIS COURT

The only respondent that is a corporation, Bartco Petroleum

Corp., is wholly-owned by respondent Nicholas J. Bartolomeo.

TABLE OF AUTHORITIES

Page

Air et Chaleur, S.A. v. Janeway, 757 F.2d 489

yea desde a sscsscaeces. 6

American Electronics, Inc. v. Neptune Meter Co.,

30 A.D.2d 117, 290 N.Y.S.2d 333 (1st Dep’t

IS 8

Anderson v. Cryovac, Inc., 862 F.2d 910 (1st Cir.

EE 7

Barnett v. Housing Authority of City of Atlanta,

7a? F.a0 1671 (1ith Cir. 1963) .............. 7

Brockett v. Spokane Arcades, Inc., 472 U.S. 491

eee 9

Browning-Ferris Industries of Vermont, Inc. v.

Kelco Disposal, Inc., Dkt. No 88-556 ......... 3

ne eee Ge wo. oo (1063)............. ll

Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837

a 4

City of Newport v. Fact Concerts, Inc., 453 U.S.

ec. che snes ese eses 3-6

Cohen v. West Haven Bd. of Police Com'rs., 638

F.2d 496 (2d Cir. 1980)...............0. 00. 5

Dell Publishing Co. v. Stanley Publications, Inc.,

9 N.Y.2d 126, 172 N.E.2d 656 (1961)......... 8

Elwood v. Pina, 815 F.2d 173 (1st Cir. 1987) .

i

~]

iv

Emery-Waterhouse Co. v. R.I. Hospital Trust

Nat. Bank, 757 F.2d 399 (Ist Cir. 1985) ......

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) ....

Fleischmann Distilling Corp. v. Maier Brewing

Co., TS Ua Tee es as Sie ctearrasicss

Gasoline Products Co. v. Champlin Refining Co.,

ae eres hype

Gemveto Jewelry Co., Inc. v. Jeff Cooper, Inc.,

568 F.Supp. 319 (S.D.N.Y. 1983) ............

Getty Petroleum Corp. v. Island Transportation

Corp., 862 F.2d 10 (2d Cir.), cert. pending,

EUG. Di I, 5 9 oh ace crea ss

G.H. Mumm Champagne v. Eastern Wine Corp.,

142 F.2d 499 (2d Cir.), cert. denied, 323 U.S.

PE EE oe ei go nk ee ee ee

Hanover State Milling Co. v. D.D. Metcalf, 240

RR. SRS rapa apye perce parity ae ee eee rare

Hudnall v. Sellner, 800 F.2d 377 (4th Cir.), cert.

denied, 479 U.S. 1069 (1987), rehearing

denied, 480 U.S. 941 (1987) .................

James v. Powell, 19 N.Y.2d 249, 225 N.E.2d 741

See RAE TORE A SN Ga brs eee care EINE

Koufakis v. Carvel, 425 F.2d 892 (2d Cir. 1970) .

Mobil Oil Corp. v. Higginbotham, 436 U.S. 618

(1978), rehearing denied, 439 U.S. 884 (1978) .

Newburger, Loeb & Ce., Inc. v. Gross, 563 F.2d

1057 (2d Cir.), cert. denied, 434 U.S. 1035

Sth cere eae ee ee ee ees

Page

11

Osterneck v. E. T. Barwick Industries, Inc., 825

F.2d 1521 (11th Cir.), affirmed, Dkt. No.

RR at SA ar a or Ae ay

Perfect Fit Industries, Inc. v. Acme Quilting Co.,

618 F.2d 950 (2d Cir.), cert. denied, 459 U.S.

i eee sa

Ralph Schrader, Inc. v. Diamond Intern. Corp.,

833 F.2d 1210 (6th Cir. 1987) ...............

Rickard v. Auto Publisher, Inc., 835 F.2d 450

ON ivi cnc tcoess

Singleton v. Wulff, 428 U.S. 106 (1976).........

Texas Industries, Inc. v. Radcliff Materials, 451

SS i i nr

United States v. Steffens, 100 U.S. 82 (1879).....

Volkswagenwerk Aktiengesellschaft v. Wheeler,

814 F.2d S12 (ist Cir. 1967).................

Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d

WN ee re

Washington v. Confederate Nation Bands and

fg | OI eT),

Weaver v. Bowers, 657 F.2d 1356 (3d Cir.)(en

banc), cert. denied, 455 U.S. 942 (1982) ......

Williamson v. Handy Button Mach. Co., 817

F.2d 1290 (7th Cir. 1985) ...................

Page

10-11

PRELIMINARY STATEMENT

1. This matter deals primarily with the issue of whether Con-

gress intended punitive damages to be an available remedy under

the Lanham Act, 15 U.S.C. §§ 1051 et seq., dealing with

trademarks.

The underlying action was commenced in January 1986. Peti-

tioner alleged violations of the Lanham Act, and various pen-

dent state claims. All of the state pendent claims (except breach

of contract) were voluntarily withdrawn by petitioner prior to

the conclusion of the first trial [App. at A5-A8]:

There were two jury trials of this action. At the first trial in

June 1987, the first jury assessed punitive damages against

respondents under the Lanham Act totalling $7,400,000.

Respondents timely moved for a remittutur or for a new trial

on the ground of excessiveness [JA 1323]. By order dated June

22, 1987, the district court granted the motion but ruled on the

merits that punitive damages were available under the Lanham

Act [App. at B3 - B6]. This ruling was plainly on the merits, and

did not rely upon or refer to Fed.R.Civ.P. 51; indeed, the district

court subsequently noted, without referring to Rule 51, that it

believed its holding on the merits was compelled by a decision

in its own circuit [App. at C3-C4].

During a conference held prior to the second trial, respondents

requested the district court to certify the issue of availability of

' References to the Appendix filed in this Court by petitioner are designated

as [App. at ___]. References to the Joint Appendix filed in the court of ap-

peals are designated as [JA ____].

Petitioner acquired the trademark from Getty Oil Company, an unrelated

company, and did not itself develop the underlying product [App. at A-4].

Although petitioner claims that respondents were “bootlegging” gasoline [Peti-

tion at 9], the district court refused to permit petitioner's counsel to use that

term, or to suggest that quality of gasoline was in issue [A 548]. Furthermore,

no evidence of quality of petitioner's gasoline, or of the unbranded gasoline,

was permitted.

punitive damages under the Lanham Act, pursuant to 28 U.S.C.

§ 1292(b). The district court declined to certify the question [JA

213], and a second trial - limited to the amount of punitive

damages under the Lanham Act - was held between July 13 and

15, 1987 before a different jury.

At the conclusion of the second trial, a verdict was rendered

against respondents totalling $2,005,000. This constituted over

52, 32 and 5 times the amount of the compensatory damages

assessed against respondents Bartco, Bartolomeo and Golio

respectively.

Respondents served a post-trial motion, which inter alia sought

judgment notwithstanding the verdict on the ground that the

Lanham Act did not permit punitive damages [JA 204-206, 213,

216-220]. In response, petitioner did not refer to either Rule 51

or Rule 49(a), but argued that Lanham Act punitive damages

were permitted under a court of appeals decision in the govern-

ing circuit. Moreover, petitioner did not claim that its punitive

damage award was based upon any state claim.

Petitioner's first reference to Rule 51 was in its brief to the court

of appeals. In addition, petitioner’s claim that it had not

withdrawn its state unfair competition cause of action - upon

which, petitioner claims, punitive damages are available - was

also raised for the first time in its brief to the court of appeals.

2. In an exhaustive opinion, the court of appeals held that (a)

Rule 51 did not bar consideration of respondents’ argument that

Congress did not intend punitive damages to be a permissible

remedy under the Lanham Act; (b) the statutory language, the

legislative history, and the unanimous view of the other circuits

that had considered the issue all indicated that the Lanham Act

did not authorize the imposition of punitive damages; and (c)

the punitive damage award could not be affirmed on the theory

that it was based upon a state unfair competition cause of ac-

tion, because that cause of action was expressly withdrawn by

petitioner during the first trial, and because there were no jury

instructions as to the elements of such cause of action [App. at A].

Petitioner then filed a petition for rehearing in which it claim-

ed, for the first time in this entire litigation, that the punitive

damage award could be sustained pursuant to Fed.R.Civ.P. 49(a).

This argument was based upon the questionable assertions that

(a) Rule 49(a) applies even to claims that have been expressly

withdrawn; (b) by proving trademark infringement under the

Lanham Act, petitioner of necessity also proved all of the elements

of an unfair competition cause of action under New York law;

and (c) punitive damages were available thereon. The court of

appeals denied the petition for rehearing - mistakenly described

as having been made by respondent Bartco {App. at E].

ARGUMENT

The decision of the court of appeals exhaustively reviewed the

language, legislative history and uniform case law concerning

the availability of punitive damages under the Lanham Act, and

its decision does not conflict with any decision of this Court or

any other court. Petitioner’s Rule 51 arguments are foreclosed

by this Court’s decision in City of Newport v. Fact Concerts, Inc.,

453 U.S. 247 (1981), and the claimed conflict is illusory. Petitioner's

Rule 49(a) arguments begin from unaceptable premises, and the

record does not otherwise permit proper resolution of such issues

by this Court. Further review is therefore unwarranted.

In addition, assuming arguendo that this court decides to hear

this case, respondents will raise two issues that were timely

presented to and rejected by the district court and not passed

upon by the court of appeals: (a) whether the Excessive Fines

or Due Process Clauses of the United States Constitution place

any restrictions on the amount of punitive damages or in the way

they are computed, an issue the Court has agreed to consider.

Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal.

Inc., Dkt. No. 88-556; and (b) whether the issue of the amount

of punitive damages (the scope of the second trial) was an issue

“so distinct and separable from the others that a trial of it alone

may be had without injustice.” Gasoline Products Co. v. Champlin

Refining Co., 283 U.S. 494, 500 (1931).’

1. Petitioner's Rule 51 arguments are undermined by this

Court’s decision in City of Newport v. Fact Concerts, Inc., 453

U.S. 247 (1981), which, as the court of appeals observed, involv-

ed “a similar procedural history” [App. at A9]. In that case, peti-

tioner had not proposed a jury instruction concerning the

availability of punitive damages, but raised the issue in a post-

trial motion. Jd. at 253. The district court noted that the issue

was not timely under Rule 51, but reached the merits nevertheless.

Id.° The court of appeals likewise decided the merits, after noting

that none of the factors that ordinarily bar review of untimely-

raised issues was present. Id. at 254-255.*

? Respondents raised the first issue by a proposed jury instruction requiring the

amount of punitive damages to be “reasonably related to, and not dispropor-

tionate” to the amount of actual damages, expressly relying upon the Amend-

ments cited above [JA 153]. Nevertheless, the actual charge that was given merely

stated that punitive damages were to punish and deter, and to set an example

and ‘warning to others, and that “the amount assessed should be sufficient to

accomplish the purpose, and at the same time should not be in an amount in

excess of the sum that is likely to accomplish the purpose” [JA 561-562].

Prior to the second trial, respondents raised the Gasoline Products issue in

a letter to the district court [JA 200-203] that the district court, by order [JA

197-199], made part of the record.

As prevailing parties on the punitive damages issue, respondents may urge,

without a cross-petition, “any ground properly raised below whether that ground

was relied upon, rejected, or even considered by the District Court or the Court

of Appeals.” Washington v. Confederate Bands and Tribes, 439 U.S. 463, 476

n. 20 (1979), since the judgment of the court of appeals would not be changed

thereby. Chevron, U.S.A., Inc. v. NRDC, 467 U.S. 837, 842 n. 7 (1984).

’ The instant case is a stronger vehicle for not applying Rule 51, since petitioner

did not urge its application to the district court and the district court did not

refer to Rule 51.

* Even if the issue of availability of punitive damages was raised for the first

time on appeal, the court of appeals would not have been precluded from con-

sidering it. “The matter of what questions may be taken up and resolved for

(Footnote continued)

Accordingly, in City of Newport, this Court reached the merits

notwithstanding Rule 51. Disclaiming any reliance on the “plain

error” doctrine that some lower courts had applied in such cir-

cumstances, 453 U.S. at 256 and n. 13, 257 n. 16, and observing

that given the “evolving” nature of the boundaries of the substan-

tive law in the area, Id. at 256, this Court reached the merits.

The same facts are present here. The district court reached

the merits; the court of appeals also reached the merits; the “ques-

tion was squarely presented and decided on a complete trial

record [and] was argued by both sides to the Court of Appeals

. -.” 453 U.S. at 257. Similarly, the dispute involves “a wholly

separable issue of law, on which the jury rendered a special ver-

dict susceptible of rectification without further jury proceedings.”

Id. at 256 n. 12.5

Petitioner’s attempts to create a conflict are unavailing. Like

City of Newport, this case does not involve “plain error” [App.

at Al0]. Accordingly, this case does not present the issue of

whether “plain error” is a permissible exception to Rule 51.

the first time on appeal is one left primarily to the discretion of the courts of

appeal, to be exercised on the facts of individual cases. . . .|WJjhere the proper

resolution is beyond any doubt, or where injustice might otherwise result,” a

court of appeal may resolve an issue not passed upon by the district court.

Singleton v. Wulff, 428 U.S. 106, 121 (1976) (citations omitted). “[W ]here ques-

tions of public importance are involved, appellate courts may sua sponte decide

purely legal issues that are necessary to a just decision.” Cohen v. West Haven

Bd. of Police Com'rs., 638 F.2d 496, 500 n.6 (2d Cir. 1980) (collecting cases).

* Petitioner’s statement that respondents “twice proposed charges [concerning

punitive damages] of their own” [Petition at 33] is disingenuous. At no time

did respondents’ proposed charges concede that punitive damages were available

under the Lanham Act. Indeed, the second trial was held after the district court

had rejected respondents’ arguments that punitive damages were not available

[JA 213], and it would have been presumptuous and possibly contemptuous for

respondents to press this point by submitting a proposed instruction that was

inconsistent with the district court’s previously-stated conclusion. In short, the

district court was well aware of respondents’ arguments on the substantive issue,

and reached the merits of the issue. The purpose of Rule 51 was therefore

satisfied.

Moreover, several circuits have noted, consistently with the

result reached here, that “plain error” is not the only exception

to Rule 51, and that obvious instances of misapplied law can be

corrected on appeal despite lack of compliance with Rule 51. See,

e.g., Osterneck v. E. T. Barwick Industries, Inc., 825 F.2d 1521,

1533 (11th Cir.) (where “error” is so fundamental as to result in

a miscarriage of justice, or when the district court’s instruction

amounts to plain error“ [citations and internal quotations omit-

ted]), affirmed on other grounds, Dkt. No. 87-1201; Air et Chaleur,

S.A. v. Janeway, 757 F.2d 489, 494 (2d Cir. 1985). Cf. William-

son v. Handy Button Mach. Co., 817 F.2d 1290, 1295 (7th Cir.

1985) (City of Newport may create an exception where issue was

contested-and new trial not required); Weaver v. Bowers, 657

F.2d 1356, 1361 (3d Cir.)(en banc) (“in unusual circumstances the

courts of appeal also have inherent power to reach issues although

not timely raised below”), cert. denied, 455 U.S. 942 (1982).°

Petitioner suggests that in City of Newport, this court merely

explicated its exercise of its own discretionary certiorari authority.

However, Rule 51 does not apply to proceedings in this Court

since the Federal Rules of Civil Procedure “govern the procedure

in the United States district courts . . .” Fed.R.Civ.P. 1. Not supris-

ingly, petitioner cites no cases in support of its claim that in Ci-

ty of Newport, this Court “limited its decision to circumstances

in which it would review an issue by granting a writ of certiorari

... [Petition at 24-25]. Indeed, as shown above, the courts of

appeal have uniformly held that City of Newport’s application

° The suggestion [Petition at 25, 45] that the courts of appeal cannot sua sponte

decide an issue for the first time on appeal, even though the issue is of a legal

nature and the parties have not been hampered in preparing an adequate record,

is belied by the cases. See, e.g., Ralph Schrader, Inc. v. Diamond Intern. Corp..,

833 F.2d 1210, 1214 (6th Cir. 1987); Volkswagenwerk Aktiengesellschaft v.

Wheeler, 814 F.2d 812, 820-821 (Ist Cir. 1987); Hudnall v. Sellner, 800 F.2d 377,

383 n. 5 (4th Cir.), cert. denied, 479 U.S. 1069 (1987), rehearing denied, 480

U.S. 941 (1987).

of Rule 51 is applicable to the lower courts as well. The claimed

conflict is illusory.’

-

2. This case is an inappropriate vehicle for this Court to deter-

mine the applicability of Fed.R.Civ.P. 49(a). Neither the district

court nor the court of appeals referred to such rule; ironically,

in light of petitioner’s argument that Rule 51 bars reaching the

substantive issue, petitioner’s Rule 49(a) claim was not presented

until petitioner’s petition for rehearing in the court of appeals.

More fundamentally, petitioner’s Rule 49(a) argument is flawed

for three reasons. First, Rule 49(a) was not intended to resurrect

claims that were expressly withdrawn, but rather was intended

to be applicable only where an incomplete special verdict was

employed with respect to a cause of action that remained in the

case. See Anderson v. Cryovac, Inc., 862 F.2d 910, 915-916 (1st

Cir. 1988). Second, petitioner presupposes - without any authority

- that the elements of the state unfair competition cause of ac-

tion are precisely coterminous with those of a cause of action

for trademark infringement under the Lanham Act. In other

words, petitioner erroneously assumes that by proving the federal

claim, the state claim was automatically also established. Third,

assuming arguendo that petitioner proved a prima facie case

under state law, petitioner also incorrectly assumes that New York

law would permit punitive damages thereunder.

In New York, a high standard is required to obtain damages

- as opposed to injunctive relief - on an unfair competition claim

based on infringing conduct. More specifically, even where the

infringement is deliberate, the plaintiff must show actual con-

fusion - not likelihood of confusion. Perfect Fit Industries, Inc.

v. Acme Quilting Co., 618 F.2d 950, 955 (2d Cir.), cert. denied,

’ Petitioner's reliance upon Elwood v. Pina, 815 F.2d 173 (1st Cir. 1987); Emery-

Waterhouse Co. v. R.I. Hospital Trust Nat. Bank, 757 F.2d 399 (1st Cir. 1985);

and Barnett v. Housing Authority of City of Atlanta, 707 F.2d 1571 (11th Cir.

1983) is misplaced. Elwood and Barnett did not involve “plain” error and (unlike

the instant case) in both cases the district court had refused to address the merits.

815 F.2d at 176; 707 F.2d at 1581 n. 18. Emery-Waterhouse did not involve any

error at all. 757 F.2d at 410, 411.

459 U.S. 832 (1982); G.H. Mumm Champagne v. Eastern Wine

Corp., 142 F.2d 499, 501 (2d Cir.), cert. denied, 323 U.S. 715

(1944); Gemveto Jewelry Co., Inc. v. Jeff Cooper, Inc., 568

F.Supp. 319, 335 (S.D.N.Y. 1983) (Weinfeld, J.).*

Petitioner offered no proof at either trial to establish actual

confusion by consumers. As Judge Learned Hand stated in G.H.

Mumm, to obtain damages under New York unfair competition

law for infringing conduct, “it is necessary to show that buyers,

who wished to buy plaintiff's goods, have been actually misled

into buying the defendant’s . . .” 142 F.2d at 501. Nevertheless,

petitioner offered no testimony from any purchaser of gasoline

at any of the three gasoline stations, or from any consumer survey

expert.

Thus, since petitioner’s proof failed to establish a prima facie

case for damages on a state unfair competition claim, it cannot

rely upon such cause of action as an alternate basis for punitive

damages. Petitioner’s reference to Hanover State Milling Co. v.

D.D. Metcalf, 240 U.S. 403, 413 (1916) (“the common law of

trademarks is but a part of the broader law of unfair competi-

tion”), is unavailing, since this Court was merely explaining the

historical origins of trademark law, and not purporting to hold

that a prima facie case for damages under a state unfair com-

petition claim involves the identical elements of a prima facie

case for damages under the Lanham Act.

Assuming arguendo that petitioner established a prima facie

case for damages under state unfair competition law, New York

law demonstrates that punitive damages are unavailable. An Ap-

pellate Division case exemplifies this point. In American Elec-

tronics, Inc. v. Neptune Meter Co., 30 A.D.2d 117, 290 N.Y.S.2d

333 (1st Dep’t 1968), the Appellate Division reversed a punitive

* The sole New_York case cited by petitioner, Dell Publishing Co. v. Stanley

Publications, Inc., 9 N.Y.2d 126, 172 N.E.2d 656 (1961), does not purport to

set forth the necessary elements of an unfair competition claim under New York

law. Moreover, Dell dealt with an action for injunctive relief, not damages, and

nowhere refers to punitive damages.

damages award, “since no public right is involved and the

underlying private wrong is susceptible of adequate compensa-

tion,” citing James v. Powell, 19 N-Y.2d 249, 225 N.E.2d 741 (1967),

and Walker v. Sheldon, 10 N.Y.2d 401, 179 N.E.2d 497 (1961).

The Appellate Division’s reference to “adequate compensation”

is highly significant, since § 35 of the Lanham Act, 15 U.S.C.

§ 1117(a), provides a plaintiff with powerful express statutory

remedies in addition to recovery of actual damages.’ However,

New York law provides that where additional remedies are

available to insure that a claim will be brought, punitive damages

are not permitted. James, 19 N.Y.2d at 26, 225 N.E.2d at 747;

Walker, 10 N.Y.2d at 404, 179 N.E.2d at 498; Newburger, Loeb

¢> Co., Inc. v. Gross, 563 F.2d 1057, 1080 (2d Cir.), cert. denied,

434 U.S. 1035 (1978); Koufakis v. Carvel, 425 F.2d 892, 907 (2d

Cir. 1970).°

Moreover, the record is inadequate for this Court in the first

instance to resolve the Rule 49(a) issue. As the court of appeals

observed, petitioner withdrew all of its claims except its Lanham

* In the instant case, petitioner has fully benefitted from the remedies arsenal

of the Lanham Act. Upon remand after the court of appeals’ decision, the district

court issued an amended judgment (which has been fully satisfied and is not

being appealed) that awarded petitioner $111,924.50 as an enhanced recovery

under 15 U.S.C. § 1117(a), and attorney fees of $130,710.62 under the same

statute.

° These points were raised on appeal by respondents, but the court of appeals

did not have to reach these issues because the state claims were no longer in

the case [App. at A7-A9].

These matters were also raised by the defendants in Getty Petroleum Corp.

v. Island Transportation Corp., 862 F.2d 10 (2d Cir.), cert. pending Dkt. No.

88-1330. See Appendix in No. 88-1330 at C4-Cl0. Indeed, because these mat-

ters had not been resolved by the district court in that case, the Second Circuit

remanded it, /d., 862 F.2d at 14, but the district court on remand did not ad-

dress these issues. In view of these circumstances, this Court should not treat

the district court’s implicit rejection of these arguments as an authoritative con-

struction of state law, particularly where such state law is not statutory. See,

e.g., Brockett v. Spokane Arcades, Inc., 472 U.S. 491, 499-500 and note 9 (1985).

Act claim during the charging conference, and the first jury was

not instructed as to the elements of a state unfair competition

cause of action [App. at A7-A9]. Respondents did not seek to in-

troduce any evidence on such state claim, including testimony

showing absence of actual consumer confusion, or testimony that

consumers consider gasoline to be a fungible product. Indeed,

the district court precluded any evidence concerning gasoline

quality (see note 1 above). Respondents would therefore be pre-

judiced if this Court were to assume that any such state claim

had been proven.

3. On the merits of the only substantive issue presented by the

petitioner (whether punitive damages are a permissible remedy

under the Lanham Act), petitioner avoids any claim that the

language of the statute, the legislative history, or relevant caselaw

supports its position. The detailed discussion of the court of ap-

peals [App. Al2-A24] as to these matters does not require repeti-

tion here”

Instead, without-expressly using the phrase, petitioner argues

that some inchoate “federal common law” authorizes the courts

to fashion a punitive damages remedy. However, there is no

general federal common law, Erie R. Co. v. Tompkins, 304 USS.

64, 78 (1938), and this is particularly true with respect to

trademarks. United States v. Steffens, 100 U.S. 82 (1879); Rickard

v. Auto Publisher, Inc., 735 F.2d 450, 458 n. 30 (11th Cir. 1984).

The two lower court cases cited by petitioner for this position

[Petition at 60] have been undermined by this Court’s subsequent

decision in Texas Industries, Inc. v. Radcliff Materials, 451 U.S.

630 (1981), which teaches that the federal courts’ power to create

" This Court’s consideration of the merits would not affect many actions, since

few trademark actions are filed in the federal district courts. For the year en-

ding June 30, 1987, of the 238,982 actions filed therein, only 1% (2,395) were

trademark actions. Annual Report of the Director of the Administrative Office

of the U.S. Courts, Schedule C-2 at 177, 180. Furthermore, review of the an-

notations suggests that many of these trademark actions seek only injunctive

relief.

11

federal common law is restricted to very limited circumstances.”

In conclusion, “federal common law” is too slender a reed to sup-

port punitive damages under the Lanham Act. To do so would

ignore Congress’ 26 years of deliberations concerning what should

be the appropriate relief in trademark cases. By enacting a statute

that does not expressly permit punitive damages yet expressly pro-

vides monetary relief in excess of a successful plaintiffs actual

damages, “Congress has struck the balance for us.” Mobil Oil

Corp. v. Higginbotham, 436 U.S. 618, 623 (1978), rehearing

denied, 439 U.S. 884 (1978)." Indeed, in Fleischmann Distilling

Corp. v. Maier Brewing Co., 386 U.S. 714, 719, 721 (1967), this

Court observed that “in the Lanham Act, Congress meticulous-

ly detailed the remedies available to a plaintiff who proves that

his valid trademark has been infringed. . . . Congress intended

§ 35 of the Lanham Act to mark the boundaries of the power

to award monetary relief in cases arising under the Act.”

2 These circumstances “fall into essentially two categories: those in which a

federal rule of decision is necessary to protect uniquely federal interests and

those in which Congress has given the courts the power to develop substantive

law.” Texas Materials, 451 U.S. at 640 (quotations and internal citations omitted).

The latter exception explains why punitive damages are permitted under the

federal Reconstruction civil rights statutes: Congress expressly authorized the

courts to fashion appropriate remedies, by its enactment of 42 U.S.C. § 1988.

'’ Even where the right alieged to have been violated is founded upon the Con-

stitution rather than a statute, the fact that Congress has carefully crafted a

comprehensive remedies provision counsels caution in permitting judicially-

created remedies. Bush v. Lucas, 462 U.S. 367, 373-374, 378, 388 (1983).

= 12

CONCLUSION

The petition for a writ of certiorari should be denied.

Dated: Great Neck, New York

March 6, 1989

Respectfully submitted,

RALPH PERNICK

Counsel of Record

Hayt, Hayt & LANDAU

600 Northern Boulevard

Great Neck, NY 11021

(516) 466-5800

CuiFForD J. Cuu,

Of Counsel