1 United States Court of Appeals

Fifth Circuit



## FILED

February 24, 2005

Charles R. Fulbruge III

Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________________

No. 03-31132

__________________________

DIAL ONE OF THE MID-SOUTH, INC.,

Plaintiff - Appellant-Cross-Appellee,

versus

BELLSOUTH TELECOMMUNICATIONS, INC.; BELLSOUTH ADVERTISING &

PUBLISHING CORPORATION; L. M. BERRY AND COMPANY,

Defendants - Appellees-Cross-Appellants.

___________________________________________________

Appeals from the United States District Court

For the Eastern District of Louisiana

___________________________________________________

Before GARZA, STEWART, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

Local franch iso r appeals the ruling of the district court limiting the damage award for

erroneous address listings in telephone company’s directory. Telephone company cross-appeals the

district court’s ruling that the company must pay under the Lanham Act for erroneously mislabeling

ex-franchisee in its directory. We affirm in part, reverse in part and remand.1 The six were: Dial One Carpeting, Dial One Lock Smith, Dial One Masonry, Dial One

Plumbing, Dial One Roofing, and Dial One Security.

2 I.

The present appeal is part of a long-standing, fractious and frequently litigious relationship

between Dial One of the Mid-South (“Dial One”) and BellSouth Telecommunications (“Bell South”).

Dial One is a franchisor; it has an exclusive agreement with Dial One of Indiana to license the “Dial

One” name to companies in the greater New Orleans area. Those companies, in turn, provide various

maintenance and repair servi ces t o residential and commercial customers. Bell South provides

telecommunications services over parts of Louisiana, including New Orleans, and, through i ts

subsidiary, BellSouth Advertising & Publishing Corporati on (“BAPCO”), Bell South publishes and

distributes a telephone directory.

Bell South and Dial One have had a number of problems over erroneous entries in Bell

South’s directory; in fact, the current litigation is the fourth such suit since 1990. In 1990, Dial One

sued Bell South for publishing the Dial One logo in connection with companies not affiliat ed with Dial

One; that case was settled out of court. A remote telephone number in Dial One’s name that was

inoperative for several months led to another suit, which also settled. In the most recent case, Dial

One brought suit against Bell South because of the latter’s erroneou s list ing o f a company in its

telephone directory as a Dial One franchisee. The district court awarded over $100,000 in damages,

an amount that this Court upheld. S ee Dial One of the Mid-South, Inc. v. BellSouth Telecomm., Inc.

,

269 F.3d 523, 525 (5th Cir. 2001).

The present case concerns two errors, conceded by Bell South, in BAPCO’s directory. The

first involved six new listings that Dial One ordered at the end of 2000. 1 These listings, for Dial One3

companies that did not yet exist, were “remote call forwarding” numbers; when dialed, a caller would

actually connect to a Bell South installation, which would then transfer the call to Dial One’s main

office. Each of the six numbers was given the address “4927 Marque Drive, New Orleans, LA”, a

location that did not house any of Dial One’s operations but rather was the address for a concrete,

industrial-type Bell South routing station. Although Dial One made numerous requests upon Bell

South—the first in October, 2001—to fix the error, the mistake went uncorrected. The second error

involved the mislabeling o f a franchisee. In December, 2000, Dial One and its air conditioning

franchisee, Help Service Company, dissolved their licensing agreement. Both parties informed Bell

South of t he change in their relationship, and requested that the Help Service listing not be

represented as pa rt o f t he Dial One network. Again, Bell South failed to make the appropriate

adjustment. The combined errors ran in a number of different editions of the phone book from May,

2001 to November, 2002.

In April, 2002, Dial One filed claims a gainst Bell South and BAPCO for federal and state

trademark infringement, unfair competition, and violations of Louisiana Civil Code Article 2315 for

the intentional publication of false information. On a motion for partial summary judgment, Bell

South argued that the General Subscriber Services Tariff it filed with the State of Louisiana (“Tariff”)

limit ed its liabilit

y to $500 per offense with respect to the Marque Drive errors. In an order dated

May 12, 2003, the district court agreed, ruling that the Tariff limited Bell South’s liability as to the

Marque Drive errors. The court also concluded, however, that to the extent that the Tariff conflicted

with federal trademark provisions—which the court interpreted as applying to only the Help Service

claim—the Tariff’s limitation was preempted. S ee Lanham Act, 15 U.S.C. § 1051 et seq. Six months

later, Dial One filed a motion for reconsideration of th e dist rict court’s ruling in which Dial One4

averred that since the court’s ruling it had “discovered” t hat the Marque Dri ve errors al so were a

violation of the Lanham Act, and, therefore, that the Tariff must also be preempted as to those errors.

After a hearing, that motion was denied.

Dial One subsequently filed a motion for sum mary judgment asking the court to find Bell

South liable for both errors. In ruling on that motion on September 25, 2003, the district court found,

first, that Bell South had conceded liabilit y as to the Marque Drive errors, and second, that Bell South

was liable under the Lanham Act for the Help Service error. As to this second holding, the court

con c luded that under Dial One

, Bell South could not avail itself of the innocent infringer defense

because its conduct with respect to the Help Service error was not objectively reasonable. Finally,

the district court rejected Bell South’s contention that Dial One was legally barred from seeking treble

damages under the Lanham Act, although the court acknowledged that it would have to weigh the

evidence before determining the extent, if any, of the damages.

After a bench trial, the district court awarded $31,500 in dam ages to Dial One for Bel l

South’s violation of the federal trademark statute with respect to the Help Service errors, and allowed

for $3000 in damages for the Marque Drive errors (six errors at the tariff-capped $500 each). Dial

One appeals the district court’s judgment with respect to the Marque Drive errors; Bell South crossappeals with respect to damages awarded for the Help Service error.

II.

A. Marque Drive Errors

(1) Dial One’s appeal

Dial One appeals the denial of its motion for reconsideration of the district court’s May 12,

2003 order. In the motion, Dial One argued that the district court should have considered whether5

the Marque Drive errors were violations of the Lanham Act and, therefore, preempted the Tariff’s

$500 per-error limitation. Because Dial One’s motion was filed on September 15, 2003, more than

10 days after the judgment order, it is treated as a Rule 60(b) motion for relief of judgment. S ee Teal

v. Eagle Fleet, Inc. , 933 F.2d 341, 347 n.3 (5th Cir. 1991); F ED

. R. C IV

. P. 60(b).

Relief under Rule 60(b) may be granted for, inter alia

, “mistake, inadvertence, [or] surprise.”

F ED

. R. C IV

. P. 60(b). We review a denial of relief under Rule 60(b) for abuse of discretion. S ee,

e.g.

, McCorvey v. Hill , 385 F.3d 846, 848 (5th Cir. 2004). “‘Motions for a new trial or to alter or

amend a judgment must clearly establish either a manifest error of law or fact or must present newly

discovered evidence. These motions cannot be used to raise arguments which could, and should, have

been made before the judgment issued. Moreover, they cannot be used to argue a case under a new

legal theory.’” S imon v. United States

, 891 F.2d 1154, 1159 (5th Cir. 1990) (quoting Fed. Deposit

Ins. Corp. v. Meyer , 781 F.2d 1260, 1268 (7th Cir. 1986)). There is nothing in Dial One’s motion

which indicates that it is based on new ly discovered evidence. Moreover, despite Dial One’s

insistence that it made a “startling discovery”—language, we note, that is better suited to the

appearance of new facts, and not for the recognition of established law—as to federal preemption of

the Tariff after the court’s order, its m o t io n was plainly no more than a new legal theory. As the

docket shows, Bell South and Dial One both had the opportuni ty to file briefs in support of the

motions for summary judgment, and the district court’s order itself establishes that preemption under

the Lanham Act was a substantial issue. The district court did not abuse its discretion in denying a

motion for relief of judgment that was six mo nths tardy and which “could, and should” have been

raised before, or shortly after, the initial decision. Id.

(2) Bell South’s cross appeal6

Although, as noted, Bell South concedes liability for the Marque Drive errors, it challenges

the amount of the monetary penalty under the Tariff. The district court awarded Dial One $500 for

each listing for a total of $3,000. Bell South argues that Dial One paid only $222 per year for each

listing, which, under the Tariff, would amount to a total award of $666 (one half of $222 for each of

six listings).

Dial One does not contest the factual record. Instead, Dial One’s argument, sparsely briefed

but reinforced at oral argument, is that this Court is precluded from considering Bell South’s appeal

for two related reasons. The first is that Bell South failed to submit evidence of the lower damages

on its motion for summary judgment dated January 21, 2003, and that because Bell South did not

offer such evidence at trial, Bell South waived its argument. Second, Dial One contends that, to the

extent that Bell South properly raised these arguments, it is not contesting them on appeal.

While it is true that Bell South did not offer evidence of damages in its summary judgment

motio n, that motion was limited to the specific issue of whether the Tariff’s limitation provision

applied. As the conclusion of Bell South’s supporting memo shows, that party did not concede $500

in liabilit y. Furthermore, according to the trial transcripts Bell South pressed this particular damages

argument before the district judge, relying on the statements of Carmelia McCrear as to the monthly

amount that Dial One paid for the Marqu e Drive listings. Finally, Bell South’s notice of appeal

explicitly challenges the district court ruling as to damages; it has briefed, and therefore preserved,

it s argument as to this issue on appeal. Because Bell South has briefed an argument that it raised

before the trial court and which is supported by evidence in the record, we see no reason to deem this

argument waived.

The Tariff, in relevant part, states:2 Dial One argues that it deserves damages for each incidence of error—of which there are

23—as opposed to each listing. We reject that argument, simply pointing to the language of the

Tariff, which quite clearly states that the relevant number is “the amount of the charge to the

subscriber for Local Exchange Service.” Because Dial One did not pay more for each additional

incidence, it does not obtain damages for each additional incidence.

7 Th e Co mpany’s liability for damages arising from errors in or omissions of listings in its

directories and or directory assistance records for which no additional charge is made

. . . in

no event shall exceed one-half the amount of the charge to the subscriber for Local Exchange

Service during the period covered by the directory or during the period that the directory

assistance records remain in error after notice to the Company by the subscriber, or $500.00,

whichever is less.

G ENERAL S UBSCRIBER S ERVICES T ARIFF

, § A 2.5.9. The Tariff t hus contemplates three possible

amounts for Bell South’s liability.

The record shows that Dial One paid $18.50 per month per list ing for the Local Exchange

Service. 2 Bell South initially published the erroneous Marque Drive listings in the May, 2001,

t elepho ne directory. It repeated those errors in the November, 2001, directory, which ran unt il

November, 2002. The period from May, 2001, to November, 2002, is eighteen months. The record

also shows, however, that Bell South was not notified about the error until October, 2001. That is

a thirteen-month period. As per the Tariff, therefore, Dial One was entitled to $120.25 (one half of

$18.50 for thirteen months) per listing, for a total of $721.50 for the six listings.

B. Help Service Errors

On cross-appeal, Bell South argues that its mistaken labeling of Help Service Company as a

Dial One corporati on is not a violation of the Lanham Act. The district court ruled that Bell South

was liable because the case was indistinguishable from Dial One

, focusing primarily on the question

of whether Bell South was an “innocent infringer” under 15 U.S.C. § 1114(2). In holding that it was

not, the district court found that Bell South’s actions were not objectively reasonable.3 That appropriate section states:

Any person who shall, without the consent of the registrant—

(a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a

registered mark in connection with the sale, offering for sale, distribution, or advertising of

any goods or services on or in connection with which such use is likely to cause confusion,

or to cause mistake, or to deceive . . . shall be liable in a civil action.

15 U.S.C. § 1114.

4 The court’s order gives undisputed facts as to the Help Service error. Following the

Fifth Circuit’s ruling in Dial One , the court concluded that Dial One had met its evidentiary

burden for liability. Only then did the court consider the innocent infringer defense. Therefore,

Bell South’s implicit contention that the district court conflated the innocent infringer defense

with the initial determination of liability, is not well taken.

8 On appeal, Bell South offers two reasons for why this case should be distinguished from Dial

One

. We find their arguments unavailing. First, Bell South maintains that this Court should apply

a negligence standard, rather than the objective reasonableness standard. Although it is difficult to

discern the origin of this argument, Bell South nevertheless contends, in its reply brief, that “the issue

here is negligence under Louisiana law, not application of the ‘innocent infringer’ defense under the

Lanham Act.” Bell South was held liable, however, under the Lanham Act. 3 Moreover, the

proceedings below made clear that state law negligence was not at issue. The gravamen of Dial

One’s complaint was not negligence under state law; rather, it was trademark infringement and unfair

competi t io n claims under both state and federal law. In its May 12, 2003 order, the district court

explicitly focused on Dial One’s trademark infringement claims under the federal Lanham Act. A plain

reading of its order of September 25, 2003 shows that, with respect to the Help Service error, the

district court was considering only federal law. As such, this Court simply does not have before it

any negligence claims to which Bell South’s argument applies. 49

Second, Bell South argues that in the 2001 litigation, Bell South was able to delete or amend

listings at its discretion. After the 1996 Telecommunications Act, 47 U.S.C. § 251 e t seq.

, a number

of new local exchange services began to provide telephone services. While BAPCO still published

the directory, it obtained numbers not fr o m the customers, but from their providers. Here, Help

Service receives telephone service from WorldCom. Accordingly, Bell South co ntends, it did not

have the discretion to change the listing, and could only do so at the request of WorldCom. This lack

of discretion, however, is only for permanent changes to the database. Bell South did in fact make

a temporary change to its databas e wit hout outside authorization. Its claim that it was legally

precluded from making a change to the directory is therefore unavailing.

C. Damages

Finally, Bell South challenges the sufficiency of the damages awarded by the district court for

t he Help Service error. The Lanham Act contains a broad remedial provision, which allo ws t he

district court substantial discretion in awarding damages. S ee 15 U.S.C. § 1117. The limits to its

authority are, primarily, two: it may not provi de for punitive damages, and the award must not be

inequitable. I

d. ; Dial One , 269 F.3d at 527. The district court’s decision to award damage is

reviewed for plain error only. F ED

. R. C IV

. P. 52(a).

Bell South cites no evidence, and we find none, showing that the district court awarded an

amount that was eithe r punit ive or inequitable. The district court considered historical data

concerning the number of annual franchises so ld and analyzed general economic conditions. The

district court also showed skepticism with the speculative nature of franchise selling. As in D ial One

,

we find that “[t]his demonstrates a weighing of the factors sufficient to support the award.” 269 F.3d

at 527. We affirm the district court’s award.10 III.

We REVERSE the award of $3000 for the Marque Drive errors, and REMAND for an entry

of judgment in the amount of $721.50. In all other respects, the judgment of the district co urt is

AFFIRMED.