Court Opinion

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Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

6-29-1994

Apex Fountain Sales v. Klienfeld, et al.
Precedential or Non-Precedential:

Docket 93-1943

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                   UNITED STATES COURT OF APPEALS
                       FOR THE THIRD CIRCUIT

                               No. 93-1943

                      APEX FOUNTAIN SALES, INC.

                                   v.

                  ERNIE KLEINFELD; FLO AIRE, INC.;
                RALPH KEARNEY, JR.; MICHAEL KEARNEY;
                      RALPH KEARNEY & SON, INC.
                                          Appellants

           On Appeal from the United States District Court
              for the Eastern District of Pennsylvania
                       (D.C. Civ. No. 83-06153)

                       Argued:    March 2, 1994

                  Before: SLOVITER, Chief Judge,
          ALITO, Circuit Judge and PARELL,1 District Judge

                      (Filed     June 29, l994    )

Robert J. Sugarman (Argued)
Sugarman & Associates
Philadelphia, PA 19103

            Attorney for Appellants

Norman Perlberger (Argued)
Jeffrey A. Cohen
Perlberger Law Associates, P.C.
Bala Cynwyd, PA 19004

     Of Counsel:
            Stephen E. Feldman

 1
  Hon. Mary Little Parell, United States District Judge for the
         District of New Jersey, sitting by designation.

                                   1
          Kenneth S. Feldman

          Attorneys for Appellee

                         OPINION OF THE COURT

SLOVITER, Chief Judge.

          The dispute between the parties to this appeal is no

stranger to this court.    See Apex Fountain Sales, Inc. v.

Kleinfeld, 818 F.2d 1089 (3d Cir. 1987) (Apex II).     This bitter

business litigation shows no sign of abating, and it is likely

that we will see it again since neither settlement nor

proceedings akin to arbitration have reduced the animosity shown

by the parties as well as their lawyers.    In this appeal

defendant-appellant Ralph G. Kearney & Son, Inc. appeals from a

finding of contempt for violating a 1985 consent decree settling

a suit initiated by appellee Apex Fountain Sales, Inc. claiming

Kearney infringed Apex's trademarks in champagne fountains.    We

also have pending a related appeal from a permanent injunction

involving the same parties but a different fountain.     See Apex

Fountain Sales, Inc. v. Kleinfeld, No. 93-2150 (3d Cir.

June 29, 1994) (Apex IV).    While we are cognizant that the

parties desire a resolution of this phase of this lengthy

litigation, we must dismiss this appeal because the district

court's contempt order is not yet final.
                                  I.

                  FACTS AND PROCEDURAL HISTORY

          Apex Fountain Sales, Inc. manufactures champagne

fountains, decorative devices containing a pump that are used for

                                  2
filling glasses of champagne or punch by means of a fountain

arrangement.   Apex used to purchase parts for its fountains from

Ralph G. Kearney & Son, Inc.2   After a contract dispute between

them, Kearney used the parts it manufactured for Apex to market

its own, virtually identical, fountains.   Apex sued Kearney in

1983 for infringement of its trademark and trade design under the

Lanham Act, 15 U.S.C. § 1125(a) (1988).    The parties entered into

a comprehensive settlement agreement which was incorporated into

a consent decree entered by the district court on August 14,

1984.

           The crucial portion of the consent decree for purposes

of the contempt findings is paragraph seven, which provided:
          Defendants will change their fountain design so that
          the fountains can no longer be identified as Apex
          Fountains and no longer use the Trademarks. Defendants
          will submit their new fountain designs for prior
          written approval to a panel consisting of Alvin Gruber,
          Ralph Kearney, Sr. and a third person to be chosen by
          the consent of Gruber and Kearney to decide on a
          majority basis whether the fountain designs meet the
          above standard and that decision will be binding on the
          parties.

App. at 13.

           On January 4, 1985, Apex moved for contempt because

Kearney was still selling the fountains it had promised not to

sell.   On January 24, 1986, the parties entered a stipulation

settling Apex's contempt claim for $75,000, releasing "defendants

2
 The other defendant-appellants, Flo Aire, Inc., Ralph Kearney,
Jr., Michael Kearney and Ernie Kleinfeld, are all associated with
Ralph G. Kearney & Son, Inc. and will be collectively referred to
as Kearney.

                                 3
from any and all liability resulting, directly or indirectly,

from the conduct alleged in the contempt Motion."     App. at 41.

          Meanwhile, because the parties could not agree on a

third member for the design panel as contemplated by the consent

decree, the court, on petition by Kearney, appointed a

Philadelphia patent and trademark lawyer, Manny Pokotilow, as the

third panelist.   Apex appealed the order and we affirmed the

court's decision.     See Apex Fountain Sales, Inc. v. Kleinfeld,

800 F.2d 1130 (3d Cir. 1986) (table) (Apex I).

          The Pokotilow panel convened in November 1985 to

consider two fountain designs submitted by Kearney for approval,

the Moselle and the Ameretta.      Both fountains were rejected on

December 18, 1985 because they were likely to be confused with

Apex's.   See Pokotilow I, App. at 34.     However, the panel stated

that if certain specific changes were made "the panel will

consider these fountains not likely to be confused with those of

the Plaintiff."     App. at 48.   The district court "accept[ed],

adopt[ed] and confirm[ed]" this opinion on March 17, 1986.      App.

at 37.

          Kearney altered the fountains to comply with the

panel's suggestions, but also modified the fountains in two other

respects which Apex claimed made them more similar.      Kearney then

marketed the two designs and the Grand Chablis (another fountain

design), exhibiting them at the Chicago Trade Fair in May 1986.

Apex sought to hold Kearney in contempt for failing to get these

fountains pre-approved by the panel.      The district court

appointed the panel as a board of special masters and referred

                                   4
the issue to them.     In September 1986, acting in this capacity,

the panel reviewed the fountains.          In effect its ruling

recommended against contempt because it found that: (1) its

earlier decision in Pokotilow I authorized Kearney to market

fountains which complied with the panel's recommendations without

having them reviewed by the panel; (2) the two additional

modifications were immaterial; and (3) the Grand Chablis did not

violate the consent decree.       See Pokotilow II, App. at 49, 52,

56.   The district court adopted and confirmed this opinion on

October 10, 1986 and found "that the proposed . . . designs

submitted to the Panel . . . and displayed at the exhibit in

Chicago, Illinois are in conformity with the Order of this Court

dated March 17, 1986."       App. at 58.    Apex appealed.

            Our opinion on appeal dealt with three separate issues.

First, we held that the statement in Pokotilow I that certain

changes would bring the fountains submitted into compliance was

"mere dicta," Apex II, 818 F.2d 1095, and thus we declined to

overturn the district court's approval of Pokotilow I despite our

concerns that such language was contrary to the consent decree.

Second, we held that the district court erred in referring the

contempt proceeding to a panel of special masters.           See id. at
1096-97.    Finally, we rejected the holding of the panel in

Pokotilow II that "no approval was necessary so long as Kearney

complied with the suggestions" in Pokotilow I.          We held that the

panel recommendations "could not exempt Kearney from the

obligation to submit new designs to the panel before exhibiting

them."     Id. at 1097-98.   We concluded that "[b]ecause it

                                    5
exhibited new fountains without the prior approval of the panel,

Kearney would appear to be in contempt of the consent decree.

There may be defenses to the contempt charge, however, and this

issue has not been properly presented either to the district

court or to this court."    Id. at 1098.     We directed that "[o]n

remand, the district court should hold a hearing to determine if

Kearney is in contempt, and if so, to determine the appropriate

sanction."    Id.

             After this decision, Kearney continued to market the

fountains approved by Pokotilow II without any changes.       Apex

petitioned for contempt in September 1987 and again in August

1988, and although the district court scheduled hearings on at

least two occasions, it never completed them.      Then a newly

constituted design panel, Karl L. Spivak presiding, met in July

1989 to consider whether three fountains, the Moselle, the

Ameretta and the Grand Chablis, violated the consent decree.         In

its October 6, 1989 decision, the panel rejected the Moselle and

approved the Ameretta and Grand Chablis.      See Spivak I, App. at

84.   In a second hearing, Apex sought reconsideration of the

approval of the Ameretta and Grand Chablis, and Kearney sought

approval of a modified Moselle.       The design panel rejected Apex's

position, and approved all three fountains, the Ameretta, Grand

Chablis, and the modified Moselle, in July 1990.      See Spivak II,
App. at 88.

          Responding to a fifth motion for contempt filed in July

1992, the district court held two days of hearings in May 1993

                                  6
regarding Apex's pending contempt motions.3      The first witness at

the hearing was Apex's accountant who testified about its losses

in fountain sales.   During cross-examination, the court secured

the agreement of the parties that an independent accountant would

audit the books of both companies.       The remainder of the hearing

consisted of viewing the fountains and hearing testimony from the

principals of Kearney and Apex.       After receiving proposed

findings of fact and conclusions of law, the district court

entered a contempt order against Kearney on July 7, 1993.        It

concluded that
          Apex has demonstrated by clear and convincing evidence
          that Kearney knowingly failed to comply with the
          requirements of the . . . consent decree in the
          following respects:

          a. It violated, ab initio, the provisions of ¶ 7 of
          the parties' agreement by failing to submit its Moselle
          and Ameretta designs for prior design panel approval.

          b. It exhibited the Grand Chablis fountain at the
          Chicago trade show which was never shown to the
          Pokotilow panel.

          c. Kearney continued to market the never approved
          original Moselle model along with the approved modified
          Moselle.
App. at 104-05.

          The court recognized that the remedy for civil contempt

must either insure compliance or compensate for past violations.

To insure compliance, it ordered Kearney to turn over the

equipment used to manufacture the infringing articles to the

United States Marshall for destruction.       To grant compensation,

3
 We note this was some six years after our opinion directing the
district court to hold a hearing on the contempt motion.

                                  7
it ordered Kearney and Apex to submit to an audit by "a certified

public accountant who shall, using standard accepted accounting

principles, determine the net profit which would have been

realized by Apex Fountain Sales, Inc. utilizing Kearney gross

sales figures of infringing fountains," App. at 108, which would

then be entered as a judgment in favor of Apex.    App. at 109.

"Infringing fountains" was defined to include the Moselle and

Ameretta "from the date of the consent agreement" and the Grand

Chablis "from the date of first manufacture."   App. at 109.

           On July 19, Kearney filed a Motion for Reconsideration,

Extension, and Partial Stay, and submitted an Amended and

Amplified Motion for Reconsideration on July 27.     The district

court denied the motion for reconsideration on August 31.     On

September 22, Kearney filed a motion for a stay of the audit and

the destruction of the equipment pending appeal.     The court

stayed its order in part on September 30, ordering the Marshall

to store the equipment pending appeal but refusing to delay the

audit.   Kearney filed its appeal on September 30.

           In its contempt order, the court stated that the

accounting would be done by an independent accountant stipulated

to by the parties within fifteen days of the contempt decree.

App. at 108.   However, since the parties were unable to agree,

the court itself appointed one three months later.     While the

accountant filed the audit report in February 1994, no judgment

containing a final dollar amount has been entered.
                               II.

                           JURISDICTION

                                8
             Apex has filed a motion to dismiss the appeal, arguing

that because the amount of money that Kearney owes Apex has not

yet been determined, no final judgment has been entered.     We

agree.4   Our appellate jurisdiction is limited to final

decisions.    28 U.S.C. § 1291 (1988).   "It is a well-established

rule of appellate jurisdiction . . . that where liability has

been decided but the extent of damage remains undetermined, there

is no final order."    Sun Shipbuilding & Dry Dock Co. v. Benefits

Review Bd., 535 F.2d 758, 760 (3d Cir. 1976) (per curiam)

(collecting cases); see also Republic Natural Gas Co. v.

Oklahoma, 334 U.S. 62, 68 (1948) ("[T]he requirement of finality

has not been met merely because the major issues in a case have

been decided and only a few loose ends remain to be tied up--for

example, where liability has been determined and all that needs

to be adjudicated is the amount of damages."); EEOC v. Delaware

Dep't of Health & Social Servs., 865 F.2d 1408, 1413 (3d Cir.

1989) ("An order which establishes liability without fixing the

amount of recovery is generally not final."); Weiss v. York

Hosp., 745 F.2d 786, 802 (3d Cir. 1984) ("because . . .

additional proceedings, including the determination of certain

defenses and of damages, are yet to take place, most of these

'judgments' . . . are not final within the meaning of 28 U.S.C.

§1291"), cert. denied, 470 U.S. 1060 (1985).

4
 Since we determine the order is not final, we need not reach the
claim Apex asserts in its brief that the appeal was not timely
because the motion for reconsideration was ineffective in
suspending the 30-day time limit imposed by Fed. R. App. P.
4(a)(1).

                                  9
          Until the court enters a judgment with the precise

amount of damages calculated, the extent of Kearney's liability

is unknown.    Given the contentiousness of this litigation, it is

not surprising that both parties have submitted lengthy motions

in the district court objecting to the accountant's findings and

seeking a hearing before the court.    See Docket Nos. 118, 121,

122, 123, 124, 130, 133.    Indeed, the district court has

recognized that the parties have factual and legal disputes about

the accountant's report and has ordered them to submit to it any

evidentiary materials no later than July 15, 1994.    Docket No.

135.

          It is more than likely that after the district court

resolves the issue, one or both parties will dispute the ultimate

amount of damages awarded, leading to a second appeal.    This

would be contrary to the federal judiciary's general policy

against piecemeal litigation.    "Permitting piecemeal appeals

would undermine the independence of the district judge, as well

as the special role that individual plays in our judicial system.

In addition, the [finality] rule is in accordance with the

sensible policy of avoiding the obstruction to just claims that

would come from permitting the harassment and cost of a

succession of separate appeals from the various rulings to which

a litigation may give rise, from its initiation to entry of

judgment."    Van Cauwenberghe v. Biard, 486 U.S. 517, 521-22 n.3

(1988) (quotations omitted); see Catlin v. United States, 324
U.S. 229, 233-34 (1945) ("The foundation of this policy is not in

                                 10
merely technical conceptions of 'finality.'   It is one against

piecemeal litigation.").

           This understanding is also reflected in our cases

holding that a district court order awarding "reasonable"

attorneys fees is not appealable until the fees are quantified in

order to prevent two appeals--one on whether attorneys fees

should be awarded and a second on the amount of the award.     See

Pennsylvania v. Flaherty, 983 F.2d 1267, 1276-77 (3d Cir. 1993);

In re Colon, 941 F.2d 242, 246 (3d Cir. 1991); Frangos v. Doering

Equip. Corp., 860 F.2d 70, 72 (3d Cir. 1988); see also Napier v.

Thirty or More Unidentified Federal Agents, Employees or

Officers, 855 F.2d 1080, 1089-90 (3d Cir. 1988) (Rule 11

sanctions may not be appealed until judgment entered on the

amount).

           Kearney argues that the order is final because

determining the precise amount of money due is a "ministerial" or

"mechanical" act and thus the order is "final" under what is

known as the Forgay-Conrad doctrine.   See Forgay v. Conrad, 47

U.S. (6 How.) 201 (1848); Parks v. Pavkovic, 753 F.2d 1397, 1401

(7th Cir.) ("if the determination of damages will be mechanical

and uncontroversial, so that the issues the defendant wants to

appeal before that determination is made are very unlikely to be

mooted or altered by it--in legal jargon, if only a 'ministerial'

task remains for the district court to perform--then immediate

appeal is allowed"), cert. denied, 473 U.S. 906 (1985); 9 James
Wm. Moore et al., Moore's Federal Practice ¶ 110.11 (2d ed.
1994).

                                11
          The district court seems to have viewed the judgment in

this way, noting that it had "resolved the legal rights of the

parties and provided the formula for calculating the amount of

the judgment; determining the dollar amount of damages is merely

a ministerial act."   App. at 116 n.1; see also App. at 123 ("we

specifically noted that our July order resolved the legal rights

of the parties, provided the formula for calculating the amount

of the contempt judgment, and rejected any assertion that the

order was interlocutory or otherwise unappealable").

          In Cromaglass Corp. v. Ferm, 500 F.2d 601, 605 (3d Cir.

1974) (in banc), we described the Forgay-Conrad doctrine as

permitting appellate jurisdiction for a "judgment which is final

except for ministerial acts."   While not mentioning Forgay, we

have continued to recognize that an order is final even if it

does not reduce the damages to a sum certain if "the order

sufficiently disposes of the factual and legal issues and [if]

any unresolved issues are sufficiently 'ministerial' that there

would be no likelihood of further appeal."     Polychrome Int'l

Corp. v. Krigger, 5 F.3d 1522, 1544 n.52 (3d Cir. 1993).    Thus,

in Polychrome, we held that we had jurisdiction of the
government's appeal of a district court order invalidating a tax

regulation, even though the court did not state the amount of

refund to which the plaintiffs were entitled.    Presumably, the

court viewed the determination of the amount of taxes paid by

each plaintiff as a ministerial calculation.    Accord United
States v. Brook Contracting Corp., 759 F.2d 320, 322-23 (3d Cir.

1985); Hattersley v. Bollt, 512 F.2d 209, 213-14 (3d Cir. 1975).

                                12
          The district court's order in this case does not fall

within the "ministerial" exception to the final judgment rule.

The record of this litigation indicates that the determination of

the "net profit which would have been realized by Apex" absent

the contemptuous acts will not be easily reached.   See Goodman v.

Lee, 988 F.2d 619, 625 (5th Cir. 1993) (when calculating damages

would be a "nightmare," judgment was not final).    While in some

circumstances this might be a simple calculation, in this

situation it has become a highly contested dispute about Kearney

and Apex sales over the past 10 years.

          Further, before the order is sufficiently final for

review purposes the district court will undoubtedly make

particularized findings indicating specifically how the damages

are actually linked to the contemptuous behavior it found.    It is

a general principle that "[t]he relief granted in civil contempt

proceedings is compensatory . . . [and] must not exceed the

actual damages caused the offended party by a violation of the

court's order."   Quinter v. Volkswagen of America, 676 F.2d 969,

975 (3d Cir. 1982) (citations omitted); see also Gregory v.
Depte, 896 F.2d 31, 34 (3d Cir. 1990) (compensatory fine "must

not exceed the actual damages caused the offended party and must

be based on evidence of a complainant's actual loss" (citations

omitted)).

          The numbers, even if the parties had agreed with the

accountant's report regarding total Kearney sales of the

"infringing fountains," will not speak for themselves.   Although

we do not express any opinion on the merits, we question whether

                                13
the district court intended to assess damages based on the sales

of all Moselle, Ameretta and Grand Chablis fountains since 1984,

because for at least some of that period Kearney was marketing

these fountains with the acquiescence, if not the explicit

approval, of the design panel and the district court.   A party

cannot be held in contempt for acts permitted by a court order

simply because that order was later reversed or disapproved, for

it is the knowledge of and disobedience of an existing court

order which are the predicates for any contempt sanction.      See

United States v. Sarbello, 985 F.2d 716, 727 (3d Cir. 1993).

          In short, while it appears that there were sales by

Kearney as to which the district court's contempt order might

well be found to be justified, that order is neither final nor

reviewable until the court details which of Kearney's sales had a

"sufficiently specific nexus" to the violations and the precise

amount of loss incurred by the sales.   Inmates of Allegheny

County Jail v. Wecht, 754 F.2d 120, 130 (3d Cir. 1985); see also

Gregory, 896 F.2d at 34.5   Indeed, when the court enters its

final order with the specificity required, it will undoubtedly

clarify some ambiguities that appear on the record.6

5
 We assume the court will also ensure that the damages do not
include any sales for which Apex released Kearney in the January
24, 1986 settlement.
6
 For example, the court found that "Kearney continued to market
the never approved original Moselle model along with the approved
Moselle modified model." App. at 105. It is not clear whether
the phrase "continued to market" refers to a date from the entry
of the consent decree in August 1984, the panel decision in
Pokotilow I in December 1985 rejecting the Moselle, or the panel
decision in Spivak I in October 1989 rejecting the Moselle.

                                14
          We make these comments in order to provide the district

court with some insight into the specificity that is necessary to

ensure proper appellate review.
          Fact finding is the trial court's province. We do
          remain responsible, however, for the ultimate justness
          of trial determinations drawn before us. Since this is
          so, we must know the basis of the trial court's
          decisions: this Court cannot be left to second-guess
          the factual basis for the district court's conclusion.
          Review is our responsibility, and we cannot review bare
          conclusions. In short, our duty to respect the trial
          court's factual determinations gives rise to a
          reciprocal one on its part to tell us the reasons for
          them. [A] mere statement of a result [] cannot stand.

Chandler v. City of Dallas, 958 F.2d 85, 89 (5th Cir. 1992)
(quotations and ellipses omitted); see also Anthuis v. Colt

Indus. Operating Corp., 789 F.2d 207, 213 (3d Cir. 1986) ("Of

course, a district court is not required to write an opinion

explaining every judgment that it renders.   But in a complex case

such as this one, . . . both the parties and this court should be

          Kearney claims that if the court meant that Kearney
marketed the original Moselle after the decision in Spivak I, the
factual findings that the Moselle was marketed "through print
advertising appearing in September 1989 and at the National
Association of Food Equipment Manufacturers show in Dallas in
October 1989," App. at 102, are inapposite because the record
shows that the print advertising in September 1989 and the
October 1989 show in Dallas preceded the decision in Spivak I.
App. at 897, 925, 929-31, 955.

          Similarly, before the order is final the district court
may want to clarify its finding that the Moselles were displayed
in two 1991 tradeshows, App. at 102, because we have found no
supporting testimony at the contempt hearing. Photographs of
Kearney's displays at the two shows, attached to the affidavit of
Apex's president, are not identified anywhere as depicting an
unmodified Moselle, and thus there is no contradiction on the
record to Ralph Kearney's testimony that he took the Moselle "off
the market" after Spivak I. App. at 867, 974-75; see also App.
at 422, 961, 971.

                               15
fully informed as to the bases of the district court's

decision.").   We anticipate that, assuming this case is properly

appealed after the entry of final judgment, the next appellate

panel to review this case will be appreciative of the district

court's attention to these details.
                               III.

                            CONCLUSION
          For the reasons set forth above, we will dismiss the
defendants' appeal for lack of an appealable order at this time.

                                16