On Appeal from the United States District Court for the District of New Jersey; D.C. Civil No. 84-01978.
Cowen, Alito and Garth, Circuit Judges.
Before us are four appeals arising out of an action initiated by Ford Motor Company ("Ford") against, inter alia, Altran Corporation ("Altran"), alleging copyright, trademark, and unfair competition violations, and an ensuing counterclaim filed by Altran against Ford for racketeering. Prior to trial, the district court dismissed Altran's counterclaim and denied a motion by Ford for Rule 11 sanctions, and thereafter, the jury returned a verdict for Altran on every Ford claim. Ford's motion for a new trial was subsequently denied. Altran has appealed the dismissal of its counterclaim, while Ford has appealed the district court's denial of its new trial motion and its Rule 11 motion. We find that the district court properly dismissed both Altran's claim against Ford and the related Rule 11 motion. However, we hold that the district court did not soundly exercise its discretion in denying Ford's motion for a new trial, and we will therefore vacate that order and instruct the district court to grant Ford a new trial on all of its claims.
This case has its genesis in Ford's entry into the lucrative automobile repair and replacement parts market in the late 1950s. Alter unsatisfactory initial efforts to merchandise repair parts, Ford began to explore other marketing options. Believing that a good tradename was one key which might unlock the door to the repair parts market, Ford commenced negotiations with the Electric Autolite Company. Electric Autolite, a primary supplier of parts for Chrysler, was a major manufacturer of automobile repair parts. In 1961, an agreement was reached pursuant to which Ford purchased from Electric Autolite the "Autolite" tradename, an Ohio spark plug factory, a Michigan battery facility, limited distribution rights, and the services of several employees.
Within the year, the United States Justice Department brought suit under section 7 of the Clayton Antitrust Act, 15 U.S.C. § 18, seeking to divest Ford of the assets it acquired from Electric Autolite. Throughout the lawsuit, Ford used the "Autolite" tradename, along with the other acquisitions. In 1966, Ford created a design which it anticipated would be used with the "Autolite" name. That design consisted of a blurred image of a 1964 Ford Mustang GT (the "Ghosted GT").
Ford was found liable for Clayton Act violations by a Michigan district court (the "divestiture court") in 1968. United States v. Ford Motor Company, 286 F. Supp. 407 (E.D. Mich. 1968). A final judgment was entered in 1970, which ordered Ford to divest itself of the Autolite assets, including the "Autolite" name. United States v. Ford Motor Co., 315 F. Supp. 372 (E.D. Mich. 1970), aff'd, 405 U.S. 562 , 31 L. Ed. 2d 492 , 92 S. Ct. 1142 (1972). After the finding of liability but before final judgment, Ford added the Ghosted GT to the "Autolite" name, and began to advertise the two together.
Pursuant to the divestiture order, Ford transferred the Autolite assets to the Bendix Corporation in 1973. Even after divestiture, Ford retained the Ghosted GT, using it in conjunction with the tradename "Motorcraft," which Ford had adopted to replace the divested "Autolite" name. In effect, Ford used the Ghosted GT to bridge the "Autolite" and "Motorcraft" names, apparently hoping that the good will associated with the "Autolite" name would travel to the "Motorcraft" name via the Ghosted GT. Ford's use of the Ghosted GT has continued to date.
In the early 1980s, Ford began to focus on the problems of counterfeit automotive parts and simulated packaging, problems which had become the subject of considerable national attention. See, e.g., Senate Comm. on the Judiciary, The Trademark Counterfeiting Act of 1984, S. Rep. No. 526, 98th Cong. 2d Sess. 4 (1984), reprinted in 1984 U.S. Code Cong. & Admin. News 3182, 3627 et seq.; Ford Motor Co. v. B & H Supply, Inc., 646 F. Supp. 975, 982 (D. Minn. 1986). To address the problem, Ford began vigorously to enforce its copyright and trademark rights by filing lawsuits against alleged counterfeiters, including Altran. These efforts were largely successful, as Ford obtained relief against at least forty companies engaged in counterfeiting activities.
Ford, however, was unsuccessful in the present case. In 1984, Ford filed an action against Altran in the New Jersey district court, alleging that Altran infringed Ford's copyright and trademark rights. Two separate allegations of wrongdoing form the core of Ford's claims against Altran. First, Ford claims that Altran obtained transmission kits packaged in trade dress closely resembling the Ghosted GT from Transgo, a California automobile parts manufacturer, and that Altran sold those transmission kits in that same packaging. Second, Ford contends that Altran supplied Summit Motor Products, Inc., with plastic bags bearing trade dress almost identical to the Ghosted GT, and that Summit subsequently used the bags to package and sell automobile parts.
Altran moved to dismiss the case, alleging that the 1970 divestiture order had divested Ford of the Ghosted GT. That motion was subsequently denied without prejudice, but now forms the basis for Altran's counterclaim. Specifically, Altran argues that the 1970 order divested Ford of the Ghosted GT, that Ford committed wire and mail fraud after the divestiture order by concealing its retention and use of the Ghosted GT, and that Ford's actions violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68 ("RICO").
Upon Ford's motion, the district court dismissed Altran's counterclaim in October, 1988.*fn1 It also denied an additional Ford motion for imposition of Rule 11 sanctions against Altran for pursuing its counterclaim. Meanwhile, Ford's copyright and trademark claims progressed to trial in January, 1990. Alter a trial which spanned eleven days, the jury returned a verdict against Ford on all of its claims. A special verdict form adopted by the district court revealed that the jury found no infringement by Altran on either the copyright or trademark claims.
On February 22, 1990, Ford filed a motion for a new trial under Fed. R. Civ. P. 59. That motion was denied on March 27, 1990. Prior to the district court's disposition of the motion, both Altran and Ford filed appeals at Nos. 90-5225 and 90-5256. Alter disposition of the motion, Altran and Ford again filed appeals at Nos. 90-5348 and 90-5363. All four appeals are now before us.
The district court's jurisdiction is not in dispute.*fn2 However, we must examine our appellate jurisdiction, since both parties allege that several of the appeals are jurisdictionally defective. Specifically, Altran argues that the appeals filed before the district court decided Ford's new trial motion are valid, while the appeals filed after the disposition of the motion are barred. Ford contends the opposite.*fn3
Our choice between these two views hinges on the validity of Ford's Rule 59 motion. If Ford's motion for a new trial was proper, two propositions follow. First, we would not have jurisdiction over the set of appeals filed prior to the district court's disposition of the motion, since any notice of appeal filed during the pendency of a Rule 59 motion is "of no effect" and a new notice of appeal must be filed following the order disposing of the motion. Fed. R. App. P. 4(a)(4); In re Sharon Steel Corp., 918 F.2d 434, 437 (3d Cir. 1990) ("Rule 4(a)(4) prohibits the filing of an appeal until the [Rule 59] motion is resolved."); Mondrow v. Fountain House, 867 F.2d 798, 799 (3d Cir. 1989) ("If the notice of appeal . . . was filed before the district court ruled on a timely Rule 59 motion, we do not have jurisdiction."). Second, we would have jurisdiction over the second set of appeals, which were timely filed after the district court disposed of Ford's motion.
On the other hand, if Ford's motion for a new trial were deemed improper, a contrary set of propositions ensue. First, we would have jurisdiction over the first set of appeals, since they were timely filed after the district court's entry of final judgment. Second, we would not have jurisdiction over the second set of appeals, since they were filed well after the thirty days allowed by the Federal Rules of Appellate Procedure. Fed. R. App. P. 4(a)(1).
In arguing that Ford's motion was invalid, Altran focuses on the scope of service. When Ford first filed its claims against Altran, it also sued several other defendants.*fn4 At the time Ford moved for a new trial, those defendants were parties to the action. Although those defendants neither participated in the January trial nor were bound by the jury verdict, having agreed previously to the entry of consent judgments in October, 1989, they were not formally dismissed from the case until after the motion. It is undisputed that Ford served only Altran with its motion, and that the other defendants were not timely served.
Rule 59 requires that a "motion for a new trial shall be served not later than 10 days after the entry of the judgment." Rule 5 states that where service is required, the motion "shall be served upon each of the parties." Because Ford did not comply with the Rule 5 requirements by failing to serve "each of the parties," Altran argues that Ford's motion was completely invalid.
We disagree. When the Rule 59 motion was filed, the unserved defendants were technically still parties to the action, and therefore should have been served. If any of the unserved parties were aggrieved by the deficient service, they could complain. But Altran was served, and generally, parties may not assert the rights of others. Altran has cited no authority holding that a party served with a new trial motion may contend on appeal that the motion was a nullity because other parties were not served.*fn5
The United States Court of Appeals for the Second Circuit rejected a similar argument in Rosen v. Dick, 639 F.2d 82 (2d Cir. 1980), and we endorse its reasoning. In Rosen, a party that had been served with a jury trial demand contended that the demand was ineffective because other parties had not been served, as is required by Fed. R. Civ. P. 38(b). Distinguishing between the unserved parties and the party that had received service, the Rosen court stated that the latter party "should not be heard now to complain" regarding the lack of service on others. Id. at 90. Since Altran was properly served in this instance, it too cannot contest the adequacy of service.*fn6
We therefore hold that Ford's motion was valid with respect to Altran. As such, we have jurisdiction over the second set of appeals at Nos. 90-5348 and 90-5363. Appeals at Nos. 90-5225 and 90-5256 are of no effect because they were filed during the pendency of the valid Rule 59 motion and will be dismissed for lack of appellate jurisdiction.
Having ascertained the boundaries of our jurisdiction, we now turn to Altran's counterclaim, in which Altran alleged that the 1970 divestment order divested Ford of the Ghosted GT, that Ford fraudulently concealed its retention and continued use of the Ghosted GT, and that this fraudulent concealment constitutes a RICO violation. The centerpiece of Altran's counterclaim is the 1970 divestiture order, which states in relevant part:
No later than eighteen (18) months after this judgment is not subject to further appeal, Ford shall divest itself of all of its interest in the tradename and trademark "Autolite" and all of its facilities in the United States for the production of automotive batteries and spark plugs, except a battery plant located at Shreveport, Louisiana. Said production facilities shall be divested in going, viable and operating condition.
The assets to be divested shall include the tradename and trademark "Autolite" and the spark plug and battery production facilities which were acquired from the Electric Autolite Company by Ford in 1961, and all improvements, betterments, replacements and additions made thereto by Ford since such acquisition up to the date of the divestiture.
Divestiture of the facilities for the production of automobile batteries may be made separately but in any event, the tradename and trademark "Autolite" and the facilities for the production of spark plugs (hereinafter referred to as Autolite assets) shall be disposed of as a unit.
United States v. Ford Motor Co., 1971 Trade-Cas. (CCH) para. 73,445 (E.D. Mich. 1970), aff'd 405 U.S. 562 , 31 L. Ed. 2d 492 , 92 S. Ct. 1142 (1972), modified 1983-1 Trade-Cas. (CCH) para. 65,436 (E.D. Mich. 1974).
Altran contends that the language in the order requiring Ford to divest "all improvements, betterments, replacements and additions" refers to additions to the "Autolite" name and that the Ghosted GT constitutes just such an addition. It then follows that Ford was required to divest the Ghosted GT. If the divestiture court did indeed order divestiture of the Ghosted GT, Altran argues that Ford fraudulently concealed its retention of the Ghosted GT from the courts, the Justice Department, and other businesses.
The district court disagreed, dismissing the counterclaim because: (1) Altran lacked standing under RICO to enforce the 1970 divestiture order; (2) the 1970 divestiture order did not divest Ford of the Ghosted GT; (3) Ford did not fraudulently conceal its retention and use of the Ghosted GT; and (4) the Justice Department could not have been so grossly negligent as to sit by idly while Ford openly flouted the terms of the divestiture order. Any of the first three of these grounds, if supported by the record, would be sufficient to affirm the district court's dismissal.*fn7
Before commencing our review of the district court's action, we must first determine what exactly the district court did. Ford's motion to dismiss the counterclaim was made pursuant to Rule 12(b)(6). The district court made no explicit determination it was going to treat the motion as anything but one for failure to state a claim. However, Rule 12(b) states in part that if:
matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
Fed.R.Civ.P. 12(b)(6). Here, both Ford and Altran submitted additional factual material in support of its motion, material which the district court apparently did not exclude. Indeed, the district court expressly considered extrinsic evidence regarding the Justice Department's alleged knowledge of the Ghosted GT, and its inactivity in that respect. Thus, we are constrained by the above language to treat the district court's disposition of the matter pursuant to Rule 56, and not Rule 12(b)(6). See Switlik v. Hardwicke Co., Inc., 651 F.2d 852, 856-57 (3d Cir. 1981) (since the district court did not exclude an affidavit which was outside the pleadings, Rule 12(b)(6) motion converted into summary judgment motion); Messer v. Virgin Islands Urban Renewal Board, 623 F.2d 303, 307 (3d Cir. 1980) ("where matters outside the pleadings are considered by the district court, a motion under Fed.R.Civ.P. 12(b)(6) . . . will be treated as a Rule 56 motion").
This presents a problem. Altran was not given a "reasonable opportunity," consistent with the mandate of Rule 12(b), to present additional evidence. For example, Altran indicated in its brief opposing Ford's motion that if the district court was going to convert the motion into one for summary judgment, it would file a statement under Rule 56(f) demonstrating its inability to produce evidence in opposition to the motion. The district court did not reply and no statement was filed. In this circuit, "it is reversible error for a district court to convert a motion under Rule 12(b)(6) . . . into a motion for summary judgment unless the court provides notice of its intention to convert the motion and allows an opportunity to submit materials admissible in a summary judgment proceeding." Rose v. Bartle, 871 F.2d 331, 342 (3d Cir. 1989).*fn8 Failure to provide such an opportunity, though, does not "require automatic reversal; it may be excused if the failure was a 'harmless error'," id., or if no prejudice to Altran occurred. Switlik v. Hardwicke Co., Inc., 651 F.2d at 857. Thus, even where the opportunity to submit pertinent material is not given, "a grant of summary judgment for a defendant may be affirmed where there is no 'state of facts on which plaintiff could conceivably recover.'" Hancock Industries v. Schaeffer, 811 F.2d 225, 229 (3d Cir. 1987) (quoting Davis Elliott International, Inc. v. Pan American Container Corp., 705 F.2d at 708); accord Rose v. Bartle, 871 F.2d at 342.
Our review of summary judgment motions is plenary. "We may affirm if, and only if, on the basis of the complaints filed by these [parties] there was no set of facts which could be proven to establish" liability. Rose v. Bartle, 871 F.2d at 342. Moreover, we will consider any additional evidence in the record before us, even though that evidence may have been submitted to the district court after it had ruled on Ford's motion, in order to avoid any prejudice to Altran and as part of our plenary review.*fn9
We begin our review of Altran's RICO counterclaim with standing. The United States Supreme Court has recognized that only the parties to a court order or decree have the power to enforce it. See Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750 , 44 L. Ed. 2d 539 , 95 S. Ct. 1917 (1975) (there is a "well-settled line of authority . . . establish[ing] that a consent decree is not enforceable directly or in collateral proceedings by those who are not parties to it even though they were intended to be benefitted by it."). Yet under RICO, a plaintiff has standing to assert a civil cause of action if he is "injured in his business or property" by racketeering activity. 18 U.S.C. § ...