Sunday, August 17, 2014

Meet the Incredibles: New Twists in the Preferred Fragrance Legal Saga



Back in October of 2011, a group of investors bought Preferred Fragrance, Inc., a manufacturer of knock-off perfumes. The investors soon came down with a severe case of buyer’s remorse. They believe they paid too much for the company because the sellers misrepresented its value. [Wait—professional knock-off artists misrepresented value? I’m shocked, shocked!—Ed.] The investors also believe that the CEO of the acquired company violated not one but two non-compete agreements.

The investors (Uni-World Capital, L.P. et al.) eventually put their allegations into an October, 2013 lawsuit against Preferred Fragrance CEO Ezriel Polatsek and others, including Ezriel’s wife, brother, and father who were employed by PF. In the course of the lawsuit, the investors asked Federal judge Paul Engelmayer for a temporary restraining order and preliminary injunction to stop Ezriel Polatsek from violating his non-compete agreements. The judge denied the request but after further discovery the plaintiffs returned with substantially stronger evidence to support the injunction.

At this point the judge decided he needed to hear live testimony from Ezriel Polatsek and his younger brother Abraham in order to sort things out. The hearings took place over several days this past June. From the snippets of transcript included in the opinion, the hearings sound at times like dialogue from a Marx brothers movie. (English is a second language for the Polatsek brothers, who grew up speaking Yiddish at home. The judge was mindful of this fact and gave it due consideration.)
THE COURT: Sorry. Wait a minute. Let me understand this. At your deposition, when you were asked, did anyone go with you on that trip, the truthful answer was your brother, correct?
THE WITNESS [Ezriel Polatsek]: Right, but –
THE COURT: Whoa. And you did not mention your brother, correct?
THE WITNESS: Correct.
THE COURT: At the time of your deposition, did you remember that your brother had gone with you on that trip?
THE WITNESS: Yes.
THE COURT: Why did you not mention your brother when you were asked the question whether anyone went with you on the trip?
THE WITNESS: Because it was a lot of Abes, and my answer to Abe Polatsek, and I just make a mistake to this answer, Abe Katz.
THE COURT: Thank you.
The Court finds Ezriel’s explanation for his false statement at his deposition—that he had accidentally confused his own brother with a business associate—wholly incredible.
That’s strong language. In addition to “wholly incredible,” the judge uses the phrase “not credible” seven times in connection with the testimony of the Polatsek brothers. (That doesn’t count “incredible,” “lacks credibility,” and “pattern of credibility-defying denials.”)

Judge Engelmayer doesn’t mince words:
The Polatseks’ original, flagrantly false testimony, is vital context. There is no benign explanation for this false testimony. The Court must conclude that the Polatseks had something to hide

The Court does not credit Ezriel’s explanations, which are repudiated by the assembled documentary evidence. They reflect a facile and unconvincing attempt to explain away emails that show active involvement by him on behalf of Exceed.
On July 10, Judge Engelmayer granted a preliminary injunction against Ezriel Polatsek enforcing the non-compete agreements. It appears to have not been a difficult call.

The judge found compelling evidence that Ezriel Polatsek “has violated his non-compete agreements, on a number of occasions and in connection with multiple competing or potentially competing entities.”
the brothers’ testimony was so substantially impeached—including by documentary proof or other testimony, and at points by its inherent illogic—that the Court is constrained to conclude that Ezriel and Abraham at points gave knowingly untruthful testimony to the Court. These adverse credibility findings contributed to the Court’s determination that Ezriel has violated the non-compete agreement and that there is a substantial likelihood that he will continue to do so absent a preliminary injunction.
The fifty-one page opinion makes for highly entertaining reading. It describes how, in 2013, two fragrance-related companies—Ouleaf and Exceed—were started by Ezriel’s brother and a former employee’s son, respectively. Abraham formed Ouleaf after a few conversations with a woman who owns a Chinese company that is PF’s main supplier. Ouleaf sells perfumes to 10 retail chains, each of which is or previously was a customer of PF. Exceed LLC was the brainchild of 22-year-old Abe Katz, son of Ezriel’s former right-hand saleswoman at PF, and its big project was a product line for the Wilhelmina modeling agency. Ezriel’s involvement with both companies was in violation of his non-compete agreement.

With the non-compete injunction out of the way (assuming that Ezriel abides by its terms), the case will now focus on the fraud charges against the Polatseks and their associates. Expect more stories from the colorful world of knock-off perfume.

The case discussed here is Uni-World Capital, L.P. et al v. Preferred Fragrance, Inc. et al., U.S. District Court, Southern District of New York, Filing 156: Opinion and order, dated July 10, 2014. It is available here.

Wednesday, August 13, 2014

Literary Smellscapes: Telegraph Avenue by Michael Chabon



This is the opening paragraph of Michael Chabon’s 2012 novel Telegraph Avenue.
A white boy rode flatfoot on a skateboard, towed along, hand to shoulder, by a black boy pedaling a brakeless fixed-gear bike. Dark August morning, deep in the Flatlands. Hiss of tires. Granular unraveling of skateboard wheels against asphalt. Summertime Berkeley giving off her old-lady smell, nine different styles of jasmine and a squirt of he-cat.
An old friend from California recommended the book to me the other day; he thought I’d appreciate its depiction of local color. And indeed, I’m inclined to like novels that set the scene with an olfactory grace note. And yes, the nine styles of jasmine is Berkeley in a bottle.

But there’s also something about Chabon’s style—a slow, steady accretion of descriptive detail that doesn’t really build a mood or lead to action—that feels laborious. I struggled to get through the next ten pages. His layering-on of references to specific places, names, and brands reminds me of a painter who slathers thick layers of paint onto a canvas and moves it around with a trowel. I gave up somewhere around page fifteen.

De gustibus. You might love it.

P.S. In creating the Amazon link I found that Michiko Kakutani calls Chabon a “magical prose stylist.” Well, that seals it. Michiko Kakutani is my personal counter-indicator; her assessments, back when I bothered to read them, were in perfect negative correlation to my own.

ISDP: New Norman Bates Award™ Nominees Plus Helpful Product Reviews



A “super moon” is illuminating the battered roof of FirstNerve Manor and casting such a bright light on the weedy grounds that our lively rodent population is reluctant to venture out. So are we, frankly, yet we had to stagger to the utility shed and hand-crank the generator so we’d have enough current to keep our Toshiba T1100 lit. We take our ISDP deadlines super cereal.

For this month’s round up we begin in the Northeast: “Human Head Discovered In Hempstead Yard.” Hempstead, Long Island, that is, where a passerby who smelled a stench helped discover a decaying human head inside a bag hidden by bushes on a residential yard. Neighbors had noticed a “terrible smell” and a “horrific odor” for days but were reluctant to investigate because two human arms were found in the area the week before. [Say what?—Ed.]

Over in Waterbury, Connecticut, the decomposing remains of a man were found in the woods at the end of a dirt road “after neighbors reported a foul odor.” Results of an autopsy are pending.

Down in lovely Hilton Head Island, South Carolina, residents of a gated community reported a foul odor coming from a home. Firemen who responded to the call saw water pouring down through a ceiling and found a man’s body in the garage. Results of an autopsy are, as they say, pending.

Being from the Bay Area, this headline had us thinking of San Francisco and noir-style detective stories: “Foul smell leads police to dead man in Mission.” But the Mission in question is the Texas town on the Mexican border, where “a body was found after an officer smelled a foul odor” late on the afternoon of July 15. The body appears to be that of a 23-year-old man from El Salvador.


Jarrod Nicholas Tutko

We have a new pair of nominees for the 2014 Norman Bates Award™: Mr. and Mrs. Jarrod Tutko of Harrisburg, Pennsylvania. The couple had six children ranging in age from three to thirteen, “several of whom suffer from serious medical conditions, including one who is deaf.” One son was confined to a room on the third floor of the family’s house because he was mentally disabled and extremely difficult to control. His father was responsible for his care, while his mother, Kimberly, took care of the other children including a bed-ridden daughter who required around-the-clock care. On a Friday night Kimberly noticed a “strange odor” coming from the third floor and asked her husband about it. PennLive.com reporter Joel Elias fills in the rest:
Her husband, Jarrod Nicholas Tutko, went upstairs and came back with body of their 9-year-old son, Jarrod Jr., wrapped in a sheet and laid him on the bathroom floor, she said.  
Believing the boy had just died, Kimberly Tutko said she pulled the sheet back and quickly realized he had been dead for several days.  
Kimberly Tutko said her husband told her the child died on Tuesday.  
“I said to him ‘Why didn’t you say anything?’” Kimberly Tutko said. “He said he was too afraid to say anything because of other kids in the house.”  
Kimberly Tutko said she then called 911.
Thirty-eight-year-old Jarrod Sr. has been “charged with endangering the welfare of children, concealing the death of a child and abuse of a corpse.” Mr. Tutko has not been charged.

Finally, we offer an item that is not technically an ISDP incident, but which we believe ISDP fans will find intriguing. There was olfactory mayhem at the Alameda County coroner’s bureau in Oakland, California, when the staff opened a body bag received earlier in the day from a funeral home. The remains were those of a mechanic whose “body had been found partially decomposed in his garage where he worked on cars.” The remains gave off “an excessively foul odor” so strong that the coroner’s staff bailed and the building was evacuated.

According to investigators, the funeral home had applied something called Smelleze Eco Corpse Deodorizer to the mechanic’s remains; however the treatment was not thought to be the cause of noxious odor.



Just FYI, the Smelleze product is available from Amazon, at $16.99 for a 2 lb. container. [Order through the Amazon button on FirstNerve and we’ll get a few pennies at no cost to you!—Ed.] The ad copy is priceless: “For a breath of fresh air, simply sprinkle Smelleze® on corpse and smell the difference.”

The customer reviews are even better (click to enlarge).





Happy shopping and see you next time!

Wednesday, July 23, 2014

Snooki Beats Excell Brands in Trademark Case


Image via TMZ.

We were beginning to think that trademark infringement lawsuits against knockoff perfume brands never result in all-out legal victory. Both the Victoria’s Secret/BBW case and the Prada S.A. case against Preferred Fragrance, Inc. ended in settlements, the terms of which have not, to our knowledge, been publicly disclosed. In each case, the plaintiffs may have achieved their overriding objective—a halt to sales of the knockoff brand—but without the risk and cost of pursuing a court order. Of course, they may have achieved far less, or nothing at all. We’ll have to monitor the market availability of the knockoff brands in the coming weeks and months to draw a conclusion.

Meanwhile, those cases inspired us to re-examine the status of Snooki Polizzi’s six-million-dollar lawsuit against Excell Brands, LLC which we covered last November.

Snooki’s original complaint, filed on August 20, 2013, alleged that Excell Brands’ Snazzy perfume infringes because it bears her name and signature exactly as they appeared on her own fragrance, Snooki Perfume by Nicole Polizzi.

Here’s what happened afterwards. On September 24, Judge Naomi Reice Buchwald granted a defense motion for extension of time; they were given until October 17. On October 10, Excell’s attorneys told the court they would file for dismissal of the charges; the next day they asked for another extension of time. Not surprisingly, on October 21 Snooki’s attorneys said they would challenge the request for dismissal. The formal request for dismissal was filed December 11. On January 6 the judge set May 30 as the end of fact discovery, and August 29 as the end of expert discover. On March 12, Judge Buchwald granted a request by both sides to keep confidential certain information produced during discovery.

On March 28, both sides wrote the court as required providing the status of the discovery process. In a word it was not good. Each side accused the other of foot-dragging and non-cooperation. The defendants want to take a deposition from Ms. Polizzi but the two sides had yet to agree on a date; interestingly, it appears that Ms. Polizzi might object to having the deposition videotaped.

On June 18, both sides agreed to a permanent injunction which Judge Buchwald signed on June 20. It’s a clear win for Snooki:
Defendant [Excell Brands LLC], and its officers, agents, servants, employees, attorneys, and other persons who are in active concert or participation with anyone described in Fed. R. Civ. P. 65(d)(2)(A) or (B), will permanently cease and desist from any and all further use of: (i) Plaintiff’s photograph, likeness, voice, sound-alike voice, signature, identity or persona; and (ii) any of the following trade names and trade marks associated with Plaintiff: “Nicole Polizzi,” “N. Polizzi”, “Polizzi,” “Snooki,” “Snooki by Nicole Polizzi,” or “Snooki Couture by Nicole Polizzi,” on or in connection with Defendant’s products, product packaging, product labeling, and/or the advertising, marketing or promotion thereof.”
P.S. We just realized that TMZ reported the injunction a couple of days ago: “The judge has yet to decide how much cash Snooks will get -- but the smell is all hers.”

Two points: First, the lawsuit was not about whether Snazzy smells too much like Snooki; it was about Excell Brands use of Snooki’s name and logo. Excell can still sell Snazzy but only without Snooki’s name or likeness on the product. Second, TMZ seems to think the case is still open; here at FN we’re not so sure. Is this lawsuit still alive? Will Snooki press for monetary damages? We’d be happy to hear from informed sources.

Monday, July 21, 2014

Party Candy Party Over?



On October 18, 2013, Prada S.A. took Preferred Fragrance, Inc. to Federal court, charging that PF’s Party Candy fragrance infringed on Prada’s trademark for Prada Candy. We noted the lawsuit as part of our ongoing coverage of the Preferred Fragrance corporate saga: a tale awash in colorful characters, knockoff fragrances, and dubious dealings. (If you know where to look, Federal court filings offer great entertainment value.)

As we remarked at the time, Preferred Fragrance has plenty of experience defending itself against trademark infringement claims and could conceivable fight Prada to a draw, namely a settlement involving something less than a court-ordered destruction of existing product, disgorgement of profits, and treble damages.

Prompted by the recent settlement reached by PF in a similar lawsuit with Victoria’s Secret and BBW, we revisited the docket in the Prada/Party Candy case to find out: What happens after a case like this disappears from the headlines?

First, the case was assigned to Ronnie Abrams, a Federal District Judge for the Southern District of New York. She ordered both sides to appear at an initial conference on January 4, 2014. Shortly before the hearing, the plaintiffs (Prada) asked that the conference be pushed back a month and the judge agreed. This happened again and yet again. (In our view, unsullied by any formal legal education, the delays were presumably requested and granted because the two sides were engaged in settlement discussions.)

When the Prada side asked for a fourth adjournment, Judge Abrams held firm and kept to the then-current April 8 date. Three days later, however, she moved the hearing to May 2 and ordered that the required filings be submitted by April 25. Two days before that filing deadline, Prada’s attorneys filed a notice of voluntary dismissal, telling the court they had reached a settlement with PF and would permanently drop the claims against them.

And so another trademark infringement case ends not with a bang but a whimper. Elapsed time from start to finish: just over six months. Did Prada get PF to stop making and selling Party Candy? Who knows. (A 3rd party is still listing it on Amazon.) Did they get monetary damages from PF? Did they go home empty handed? Would they like to comment here on FN?