E. Mishan & Sons, Inc. v. Novel Brands LLC

Background

E. Mishan & Sons, Inc., doing business as Emson, sued Novel Brands LLC under the Lanham Act, 15 U.S.C. § 1125(a)(1), asserting claims involving false advertising, unfair competition, false designation of origin, false description of fact, and misrepresentation of fact. On August 29, 2018, the court entered a consent judgment holding Novel Brands liable under the Lanham Act for all three claims in the complaint. The court referred damages to Magistrate Judge Sarah Netburn for an inquest. Judge Netburn issued a Report and Recommendation, and Judge Broderick adopted it in its entirety on February 10, 2022.

The Motion

Novel Brands filed a motion under Federal Rule of Civil Procedure 59(a)(2) for a new trial. It argued that the court had failed to deduct $388,426.80 in Novel Brands’ costs when calculating damages. Novel Brands also submitted additional evidence, including canceled checks, wire records, a summary chart, and a supporting declaration.

Court’s Analysis

Judge Broderick first ruled that Rule 59(a)(2) was procedurally improper. That rule permits a new trial after a nonjury trial, but this case had involved a consent judgment and a damages inquest rather than a trial. The damages inquest had not included an evidentiary hearing; damages were decided from the parties’ written submissions.

The court therefore construed the filing as a motion for reconsideration. Under Southern District of New York Local Civil Rule 6.3, such a motion had to be served within fourteen days after the challenged decision. Novel Brands filed its motion on March 11, 2022, more than fourteen days after the February 10, 2022 Opinion and Order. The court consequently denied the motion as untimely.

The court also considered the argument on its merits. It found that Judge Netburn and Judge Broderick had already considered and rejected Novel Brands’ argument about its cost-of-goods calculation. The court stated that Judge Netburn had considered all of Novel Brands’ evidence, but credited only costs that the evidence sufficiently proved. The court did not credit the cost-of-goods calculation because it was supported only by a summary spreadsheet and three litigation-prepared declarations, and because Novel Brands had not addressed an allegation that it had artificially inflated those costs through certain product transactions.

The court further ruled that the additional documents submitted with the motion were irrelevant to the earlier decision and could not be used to present new facts that had not previously been submitted. It also rejected Novel Brands’ reliance on a prior appellate decision concerning damages because that case involved a stipulation limiting damages to defendants’ profits, while this case did not. The court noted that under the Lanham Act, the plaintiff must prove the defendant’s sales, while the defendant must prove claimed costs or deductions.

Disposition

Judge Vernon S. Broderick denied Novel Brands’ motion for a new trial. The Clerk of Court was directed to terminate Document 69. The opinion also states that Novel Brands’ appeal had been stayed pending resolution of this motion.