has been read not necessarily to require that the infringing acts
have taken place `in commerce' which is subject to congressional
regulation, but the acts have an adverse effect on that
commerce." Id. at 427; see also Nintendo, 34 F.3d at 250
(holding that the jurisdiction of the Lanham Act extends to cases
where "the defendant's extraterritorial conduct was not confined
in its effects to the foreign nation where it occurred, but could
have adverse effects on commerce within the United States").
6. While some courts have held that, under § 43(a) of the
Lanham Act, a plaintiff must prove a "substantial effect on
United States commerce," see, e.g., Atlantic Richfield Co. v.
Arco Globus Int'l Co., 150 F.3d 189, 192 (2d Cir. 1998), other
courts have disagreed with this holding and concluded that a
plaintiff need only demonstrate "an adverse effect on . . .
commerce" in the United States. See, e.g., American Rice, Inc.
v. Arkansas Rice Growers Cooperative Ass'n, 701 F.2d 408, 413-15
(5th Cir. 1983); Wells Fargo, 556 F.2d at 427. To resolve Sara
Lee's Lanham Act claim, however, I need not address, or attempt
to resolve, this split of authority, because at the very least a
plaintiff must prove some adverse impact on commerce in the
United States. See Bulova, 344 U.S. at 288, 73 S.Ct. 252
(finding jurisdiction under the Lanham Act where the defendant
"`brought about forbidden results within the United States'")
(quoting United States v. Sisal Sales Corp., 274 U.S. 268, 276,
47 S.Ct. 592, 71 L.Ed. 1042 (1927)); see also Hellenic Lines
Ltd. v. Rhoditis, 398 U.S. 306, 316, 90 S.Ct. 1731, 26 L.Ed.2d
252 (1970) (Harlan, J., dissenting) (noting that in Bulova
"[t]here was no question that plaintiff had suffered the injury
and American commerce had been adversely affected in the way that
the Lanham Act sought to prevent"). Sara Lee has failed to
present sufficient evidence to meet its burden of proof under
7. A plaintiff's failure to demonstrate that the alleged unfair
trade practices had "adverse effects on commerce within the
United States" deprives the Court of jurisdiction under the
Lanham Act. See Bulova Watch Co., 344 U.S. at 281, 73 S.Ct.
252; Nintendo, 34 F.3d at 250.
8. This Court found above, in its findings of fact, that Sara
Lee presented no evidence at trial demonstrating that LCC's
alleged misrepresentations and false advertising had an adverse
effect on commerce within the United States. Sara Lee has not
presented any evidence that it sustained a loss of profits,
goodwill, or otherwise felt the impact of LCC's alleged
misrepresentations and false advertising. Without any evidence of
the effect of LCC's alleged conduct, this Court certainly cannot
conclude that the effect was "adverse." Thus, Sara Lee has failed
to meet its burden of proving an essential, jurisdictional
element of its claim under § 43(a) of the Lanham Act.
Accordingly, this Court does not have jurisdiction over Sara
Lee's Lanham Act claim, and must dismiss the Lanham Act claim for
lack of subject matter jurisdiction. See Steel Co. v. Citizens
for a Better Environment, 523 U.S. 83, 118 S.Ct. 1003, 1012-13,
140 L.Ed.2d 210 (1998) (holding that "`[without jurisdiction] the
court cannot proceed at all in any cause'") (quoting Ex parte
McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264 (1868)).
North Carolina Unfair Trade Practices Act
9. The North Carolina Unfair Trade Practices Act provides, in
relevant part: "Unfair methods of competition in or affecting
commerce, and unfair or deceptive acts or practices in or
affecting commerce, are declared unlawful." N.C. Gen.Stat. §
10. "To establish a prima facie claim for unfair trade
practices, the plaintiff must show: (1) defendant committed an
unfair or deceptive act or practice, (2) the action in question
was in or affecting
commerce, N.C. Gen. State. § 75-1.1 (1994), and (3) the act
proximately caused injury to the plaintiff." Pleasant Valley
Promenade v. Lechmere, Inc., 120 N.C. App. 650, 464 S.E. 47, 58
(1995) (applying § 75-1.1).
11. "The overall purpose and legislative intent of G.S. 75-1.1
is `to declare deceptive acts or practices in the conduct of any
trade or commerce in North Carolina unlawful, to provide civil
means to maintain ethical standards of dealings between persons
engaged in business and the consuming public within this State,
and to enable a person injured by deceptive acts or practices to
recover treble damages from a wrongdoer.'" McDonald v.
Scarboro, 91 N.C. App. 13, 370 S.E.2d 680, 683 (1988) (quoting
Hardy v. Toler, 24 N.C. App. 625, 211 S.E.2d 809, 813, modified
on other grounds, 288 N.C. 303, 218 S.E.2d 342 (1975)).
12. Section "75-1.1 requires an in-state injury to plaintiff
before plaintiff can state a valid unfair trade claim." The `In'
Porters, S.A. v. Hanes Printables, Inc., 663 F. Supp. 494, 501
13. As this Court noted in its findings of fact above, Sara Lee
has presented no evidence suggesting that it suffered any injury,
let along "an in-state injury." See id. Accordingly, Sara Lee
has failed to meet its burden of proving its claim under the
North Carolina Unfair Trade Practices Act.
14. This Court has diversity jurisdiction, pursuant to
28 U.S.C. § 1332, over Sara Lee's claim for negligent
misrepresentation. In resolving a claim brought under the Court's
diversity jurisdiction, "the law to be applied . . . is the law
of the state." Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58
S.Ct. 817, 82 L.Ed. 1188 (1938); see also Gasperini v. Center
for Humanities, Inc., 518 U.S. 415, 417, 116 S.Ct. 2211, 135
L.Ed.2d 659 (1996) (holding that, under the Erie doctrine,
"federal courts sitting in diversity apply state substantive law
and federal procedural law"). Accordingly, this Court must apply
New Jersey law in its consideration of Sara Lee's claim for
negligent misrepresentation. Cf. Lithuanian Commerce Corp. v.
Sara Lee Hosiery, 23 F. Supp.2d 509, 515 (D.N.J. 1998) (applying
New Jersey law to LCC's common law claims). Moreover, the parties
have proceeded on the assumption that New Jersey law governs the
state law claims in this case, other than the claim specifically
asserted by Sara Lee under North Carolina statutory law. See
Memorandum of Law in Support of Plaintiff's/Third Party
Defendant's Motion for Judgment as a Matter of Law, filed Nov.
20, 1998, at 13-16 (applying New Jersey law to Sara Lee's claims
for negligent misrepresentation and trade libel); Sara Lee's
Memorandum of Law in Opposition to LCC's Motion for Judgment as a
Matter of Law, filed Dec. 18, 1998, at 26, 32 (same).
15. "[N]egligent misrepresentation . . . requires proof that an
`incorrect statement was negligently made and justifiably relied
upon' and that injury was sustained as a consequence of that
reliance." Carroll v. Cellco Partnership, 313 N.J. Super. 488,
502, 713 A.2d 509 (N.J.Super.Ct.App. Div. 1998) (quoting Gross v.
Johnson & Johnson-Merck Consumer Pharm. Co., 303 N.J. Super. 336,
344, 696 A.2d 793 (Law Div. 1997)).
16. As this Court determined in its findings of fact, Sara Lee
has not met its burden of proving that LCC's representations that
L'eggs pantyhose prevent varicose veins were "incorrect." See
17. Similarly, this Court also determined in its findings of
fact that Sara Lee has not met its burden of proving that "injury
was sustained." See id.
18. Furthermore, Sara Lee has not met its burden of proving
that it suffered an injury "as a consequence of" LCC's alleged
false or misleading statements. See id.
19. Because Sara Lee has failed to meet its burden of proving
that LCC negligently misrepresented the qualities of L'eggs®
pantyhose, Sara Lee cannot prevail on this claim.
20. This Court also has diversity jurisdiction, pursuant to
28 U.S.C. § 1332, over Sara Lee's claim for trade libel and,
therefore, this Court must apply New Jersey law with respect to
this claim. See supra ¶ 14.
21. To prove a claim of trade libel under New Jersey law, a
plaintiff "must demonstrate 1) publication 2) with malice 3) of
false allegations concerning its property, product or business,
and 4) special damages, i.e., pecuniary harm." Juliano v. ITT
Corp., Civ. No. 90-1575, 1991 WL 10023, *4 (D.N.J. Jan.22, 1991)
(Fisher, J.) (citing System Operations v. Scientific Games Dev.
Corp., 555 F.2d 1131, 1140 (3d Cir. 1977)).
22. In its findings of fact, this Court found that Sara Lee
presented no evidence at trial tending to show that LCC's
representations that L'eggs® pantyhose prevent varicose veins
were false. Indeed, three witnesses, Mizelle, Zajanckauskiene,
and Dr. Pirouviene, testified that L'eggs® pantyhose do prevent
varicose veins. Thus, Sara Lee has failed to meet its burden of
proving that LCC made "false allegations concerning" L'eggs®
pantyhose, which is an essential element of a trade libel claim.
23. In addition, Sara Lee has presented no evidence of
"pecuniary harm," which is an element of a claim for trade libel
under New Jersey law. See id. Indeed, Sara Lee withdrew its
claims for monetary damages and, as a result, did not pursue a
claim for pecuniary loss. Thus, Sara Lee has failed to meet its
burden of proof on a second essential element of trade libel
under New Jersey law.
24. Because Sara Lee has failed to meet its burden of proof
with respect to at least two of the essential elements of a trade
libel claim, Sara Lee cannot prevail on this claim.
25. Sara Lee seeks injunctive relief under all four
counterclaims, as well as attorneys' fees under the North
Carolina Unfair Trade Practices Act.
26. Specifically, Sara Lee requests that this Court issue a
permanent injunction that would require LCC "to notify their
customers that the ads that [LCC] placed before were not
true[and] were misleading." Trial Tr. at 2615 (statement of Carl
Hittinger, Esq., counsel for Sara Lee).
27. Sara Lee has abandoned any claim for monetary damages.
See Trial Tr. ar 2624-25.
28. "In deciding whether a permanent injunction should be
issued, the court must determine if the plaintiff has actually
succeeded on the merits (i.e., met its burden of proof)."
Ciba-Geigy Corp. v. Bolar Pharm. Co., 747 F.2d 844, 850 (3d
Cir. 1984). Because I have found above that Sara Lee has failed
to meet its burden of proof on each of its counterclaims, I find
that a permanent injunction should not be issued.
29. Moreover, since I have concluded above that Sara Lee has
failed to meet its burden of proof under the North Carolina
Unfair Trade Practices Act, I hold that Sara Lee is not entitled
to recover attorneys' fees under that Act.
III. MOTION FOR JUDGMENT AS A MATTER OF LAW PURSUANT TO RULE
LCC has moved this "Court to enter a Judgment as a Matter of
Law in favor of LCC with regard to all remaining counts of the
Counterclaim" of Sara Lee. Plaintiff's and Counterclaim
Defendants' Motion for Judgment as a Matter of Law, filed Nov.
20, 1998, at 2.
In making its findings of fact and conclusions of law, this
Court has determined
that Sara Lee has failed to meet its burden of proof on at least
one of the essential elements of each of its counterclaims.
Accordingly, I will grant LCC's motion for judgment as a matter
of law on Sara Lee's claim under the North Carolina Unfair Trade
Practices Act and for negligent misrepresentation and trade
libel. In addition, I must dismiss Sara Lee's claim under § 43(a)
of the Lanham Act for lack of subject matter jurisdiction.
Based upon the findings of fact and conclusions of law set
forth above, this Court has determined that Sara Lee has failed
to meet its burden of proof on at least one essential element of
each of its counterclaims and claims made in its Third-Party
Complaint. Accordingly, I will grant LCC's motion for judgment as
a matter of law, pursuant to Rule 52(c) of the Federal Rules of
Civil Procedure, on Sara Lee's Counterclaim and its Third-Party
Complaint. I will enter an appropriate order.
This matter having come before the Court on the motion of
Plaintiff and Counterclaim Defendant, Lithuanian Commerce
Corpation, and Additional Counterclaim Defendants, Algis Vasys
and Laima Zajanckauskiene (collectively, "LCC"), for judgment as
a matter of law, pursuant to Rule 52(c) of the Federal Rules of
Civil Procedure, on the Counterclaims and Third Party Complaint
of Defendants and Counterclaim Plaintiffs, Sara Lee Hosiery, Sara
Lee Hosiery International, Sara Lee International, and Sara Lee
Corporation (collectively, "Sara Lee"), Gregory D. Saputelli,
Esq., and James R. Thompson, Esq., of Obermayer, Rebmann, Maxwell
& Hippel, LLP, appearing on behalf of LCC, and Carl W. Hittinger,
Esq., and Neil C. Schur, Esq., of Stevens & Lee, PC, appearing on
behalf of Sara Lee; and,
The Court having considered the submissions of the parties, as
well as the evidence presented at trial; and,
The Court having made its findings of fact and conclusions of
law as set forth in the OPINION filed concurrently with this
IT IS, on this 23rd day of April, 1999, HEREBY ORDERED that the
motion of LCC for a judgment as a matter of law on the
Counterclaims and Third-Party Complaint of Sara Lee is GRANTED.