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Newmark Realty Capital, Inc. v. BGC Partners, Inc.

United States District Court, N.D. California, San Jose Division

May 29, 2018

NEWMARK REALTY CAPITAL, INC. Plaintiff,
v.
BGC PARTNERS, INC., et al., Defendants.

         ORDER DENYING IN PART PLAINTIFF'S MOTION FOR ORDER TO SHOW CAUSE WHY DEFENDANTS ARE NOT IN CIVIL CONTEMPT OF COURT'S PRELIMINARY INJUNCTION ORDER; AND ORDER REGARDING PLAINTIFF'S MOTIONS TO SUBMIT NEW EVIDENCE [RE: ECF 145, 207, 222]

          BETH LABSON FREEMAN, United States District Judge

         Plaintiff Newmark Realty Capital, Inc. filed a Motion for Order to Show Cause Why Defendants Are Not in Civil Contempt of the Court's Preliminary Injunction Order (“Motion for Contempt”). Mot., ECF 145. Plaintiff claims that Defendants BGC Partners, Inc. and Newmark & Co. Real Estate, Inc. are in contempt for violating the Court's November 16, 2017 preliminary injunction order. Having considered the parties' briefing and oral argument, the Court hereby DENIES IN PART Plaintiff's Motion for Contempt. The Court, however, orders Defendants to correct technical violations of the preliminary injunction order. The Court will also allow Defendants to respond to Plaintiff's newly submitted evidence which they did not have an opportunity to respond.

         I. BACKGROUND

         Plaintiff and Defendants are companies that offer services in the commercial real estate market. Over the years these companies have both expanded geographically and Defendants have expanded substantially into the mortgage services sector occupied by Plaintiff. On April 4, 2016, Plaintiff filed this action against Defendants, alleging trademark infringement. Compl., ECF 1.

         On November 16, 2017, the Court issued a preliminary injunction order that enjoined Defendants from using:

NEWMARK alone or in combination with any other words as a trademark to denote the source of the following services-mortgage banking, mortgage brokerage, loan servicing, investment brokerage and investment consulting in the field of commercial real estate.

         November 16, 2017 Order, ECF 134. That order went into effect on November 17, 2017 upon Plaintiff's posting of a bond. ECF 137. On November 30, 2017, Plaintiff filed the instant motion claiming that Defendants had failed to comply with the preliminary injunction order. Mot. The following day, on December 1, 2017, Defendants filed a Motion for Stay and Motion for Reconsideration of the Preliminary Injunction. ECF 148, 151.

         The Court held a hearing on Defendants' Motion for Stay and Plaintiff's Motion for Contempt on December 14, 2017. Defendants' Motion for Stay was denied. ECF 173. The Court, however, recognized that the terms “investment brokerage” and “investment consulting” may be too vague to be enforceable. Id. Thus, the Court suspended the injunction as to “investment brokerage” and “investment consulting” services pending further consideration of the parties' efforts to jointly propose clear definitions of these terms. Id. As for Plaintiff's Motion for Contempt, the Court heard oral argument but set another hearing on January 4, 2018 due to the limited time for argument. The Court also allowed the parties to file supplemental briefing by January 2, 2018. During the January 4, 2018 hearing, the Court provided some guidance as to the boundaries of the preliminary injunction order in relation to Defendants' website. See January 4, 2018 Hearing Tr., ECF 183. The Court also asked the parties to meet and confer to facilitate Defendants' compliance based on the Court's guidance. Defendants agreed to provide a declaration regarding the status on correcting their sales brochures.

         Thereafter, the Court granted in part and denied in part Defendants' Motion for Reconsideration of the Preliminary Injunction. March 30, 2018 Order, ECF 262. Determining that the November 16, 2017 Order contained several errors, the Court narrowed the preliminary injunction. Id. at 42-43. Accordingly, Defendants are currently enjoined from using:

NEWMARK alone or in combination with any other words, but not NEWMARK KNIGHT FRANK alone or in combination with other words, as a trademark to denote the source of the following services-mortgage banking, mortgage brokerage, loan servicing, and investment services which are subordinate to or derivative of mortgage services provided by mortgage brokers-in the field of commercial real estate.

Id. at 43.

         Prior to the Court's ruling on Defendants' Motion for Reconsideration of the Preliminary Injunction, Plaintiff filed a Motion to Modify the Preliminary Injunction and requested the Court to expand the November 16, 2017 injunction. ECF 202. Considering the narrowed injunction issued on March 30, 2018, the Court denied Plaintiff's Motion to Modify the Preliminary Injunction. ECF 284. As such, the currently effective injunction is set forth in the Court's March 30, 2018 Order.

         Both parties have appealed the Court's preliminary injunction order to the Ninth Circuit. ECF 319, 323. This Court retains jurisdiction to enforce the preliminary injunction while the appeal proceeds. See Ashker v. Sayre, No. 05-03759 CW, 2010 WL 1980233, at *3 (N.D. Cal. May 17, 2010).

         II. LEGAL STANDARD

         A. Civil Contempt

         Civil contempt “consists of a party's disobedience to a specific and definite court order by failure to take all reasonable steps within the party's power to comply.” Reno Air Racing Ass'n., Inc. v. McCord, 452 F.3d 1126, 1130 (9th Cir. 2006) (citation omitted); see also Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986) (“Civil contempt occurs when a party fails to comply with a court order.”). “The standard for finding a party in civil contempt is well settled: The moving party has the burden of showing by clear and convincing evidence that the [nonmoving party] violated a specific and definite order of the court.” FTC v. Affordable Media, LLC, 179 F.3d 1228, 1239 (9th Cir. 1999) (quoting Stone v. City & County of San Francisco, 968 F.2d 850, 856 n. 9 (9th Cir. 1992)).

         “The contempt need not be willful.” In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993) (internal quotation marks and citation omitted). Contempt sanctions, however, are not warranted where the nonmoving party's action “appears to be based on a good faith and reasonable interpretation” of the court's order. Id. (quoting Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 889 (9th Cir. 1982)). Substantial compliance also is a defense to civil contempt-“[i]f a violating party has taken ‘all reasonable steps' to comply with the court order, technical or inadvertent violations of the order will not support a finding of civil contempt.” Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986) (citation omitted).

         Accordingly, the party alleging civil contempt must demonstrate by clear and convincing evidence that (1) the nonmoving party violated a court order, (2) the noncompliance was more than technical or de minimis, and (3) the nonmoving party's conduct was not based on a good faith and reasonable interpretation of the violated order. Facebook, Inc. v. Power Ventures, Inc., No. 08-CV-05780-LHK, 2017 WL 3394754, at *8 (N.D. Cal. Aug. 8, 2017) (citing United States v. Bright, 596 F.3d 683, 694 (9th Cir. 2010)).

         B. Request for Judicial Notice

         The Court may generally consider matters properly subject to judicial notice. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). In support of its motion, Plaintiff filed a Request for Judicial Notice (“RJN”) of “Newmark Group, Inc.'s November 21, 2017 Amendment No. 1 to Form S-1 Registration Statement filed with the Securities and Exchange Commission.” RJN, ECF 146.

         Plaintiff's RJN is GRANTED, as the document is a matter of public record and Defendants do not dispute the document's authenticity. Fed.R.Evid. 201; Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). While the document is accepted as what it represents, any specific fact findings and legal conclusions set forth in the document may not bind this Court.

         III. EVIDENTIARY OBJECTIONS

         i. Defendants' Objections to Plaintiff's Supplemental Brief and Accompanying Declarations

         Defendants object to and request the Court to strike Plaintiff's Supplemental Brief (“Pl.'s Supplemental Brief, ECF 177), Second Supplemental Yip Declaration (ECF 177-1), and Dao Declaration (ECF 177-5). ECF 179. Defendants contend that Plaintiff's Supplemental Brief is “overlong due to the use of copious, lengthy footnotes.” Id. at 1-2. Defendants also argue that the Second Supplemental Yip Declaration inappropriately recites prior factual allegations in an attempt to flout page limits and contains evidence that “adds nothing to the contempt motion . . . but to which Defendants yet again ha[d] no opportunity to reply.” Id. at 2. The Court does not find the content and length of Plaintiff's Supplemental Brief and the Second Supplemental Yip Declaration to be improper. The Court therefore OVERRULES Defendants' objections and DENIES the request to strike Plaintiff's Supplemental Brief and the Second Supplemental Yip Declaration.

         As for the Dao Declaration, Defendants assert that it contains hearsay. ECF 179 at 2. This declaration states that Tom Dao, an employee of Plaintiff, received an “email from a contact” that references a financing deal facilitated by “NKF Capital Markets.” Dao Decl., ECF 177-5; see also Exs. 1 and 2 to Dao Decl., ECF 177-6, -7. The Court does not find that the Dao Declaration contains hearsay because Plaintiff offers the declaration for the proposition that confusion has “surfaced regarding NKF CAPITAL MARKETS” (Pl.'s Supplemental Brief 3) rather than for the truth of the matter asserted. The Court therefore OVERRULES Defendants' objections and DENIES the request to strike the Dao Declaration.

         ii. Plaintiff's Objections to the Supplemental Declaration of Alison Lewis

         Plaintiff filed nine objections to the Supplemental Lewis Declaration (ECF 187-1) which was submitted as a status report regarding Defendants' sales brochures. ECF 188. Defendants filed a reply to Plaintiff's objections. ECF 194.

         First, Plaintiff objects to Ms. Lewis' statement that “[a]s someone who has worked in commercial real estate since 1999, I agree with Plaintiff's principal, Mr. Mitsanas, who testified that sales and financing services have been offered side-by-side for decades” as lacking foundation and mischaracterizing Mr. Mitsanas' testimony. ECF 188 at 1. This objection is OVERRULED because Ms. Lewis is making a statement based on her personal understanding of Mr. Mitsanas' statement rather than arguing the precise nature of his position.

         Second, Plaintiff objects to Ms. Lewis' statement that “I cannot imagine that customers would be confused about the use of the word ‘Newmark' on sales brochures that pre-date the Court's order, since those brochures are fundamentally about selling property, something that Plaintiff does not do” as lacking foundation and speculative. Id. This objection is OVERRULED because Ms. Lewis is describing her belief based on her personal observations of the brochures and understanding of Plaintiff's business. To the extent that Ms. Lewis' “belief” is not relevant the Court will give this evidence the weight it deserves.

         Plaintiff's third to eighth objections pertain to Ms. Lewis' statements regarding Defendants' production and distribution of sales brochures. See ECF 188 at 2-5. For example, Ms. Lewis explains that Defendants “rarely if ever use Microsoft Office” and instead “use[s] a more sophisticated design tool known as Adobe Creative Suite.” Supplemental Lewis Decl. ¶ 9. Plaintiff objects to those statements as lacking foundation or irrelevant. The Court finds that the objected statements are relevant and do not lack foundation because Ms. Lewis, as Chief Administrative Officer for Newmark Knight Frank, has worked with her marketing staff on editing Defendants' sales brochures (see Supplemental Lewis Declaration ¶¶ 1-2). Plaintiff's third to eighth objections are therefore OVERRULED.

         In addition, Plaintiff objects to Ms. Lewis' statement that “[Defendants'] brokers would much rather talk to . . . clients about how we can help them sell properties” as speculative, lacking foundation, and irrelevant. ECF 188 at 4-5; Supplemental Lewis Decl. ¶ 17. However, as provided in Ms. Lewis's Declaration in support of Defendants' opposition to the Motion for Contempt, she has had interactions with Defendants' brokers while executing Defendants' compliance plan. See generally Lewis Decl. in Supp. of Defs.' Opp'n, ECF 164-2. Thus, the Court does not find that Ms. Lewis' statement to be speculative or lacking foundation. Her statement is relevant because it is probative of Defendants' compliance with the injunction order. Supplemental Lewis Decl. ¶ 17. This objection is therefore OVERRULED.

         IV. PLAINTIFF'S MOTIONS TO SUBMIT NEW EVIDENCE

         A. Plaintiff's Motion to Submit New ...


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