Coach, Inc., et al.
Peter J. Sapatis, et al. No. 2014 DNH 021
Erica Mecler Caron, Esq. Jeffrey K. Techentin, Esq. Kyle Zambarano, Esq. Lisa Snow Wade, Esq. Robert S. Carey, Esq. Jeremy T. Walker, Esq. Nicholas F. Casolaro, Esq.
MEMORANDUM AND ORDER
Paul Barbadoro United States District Judge
This case arises from the sale of counterfeit goods by third party vendors at a flea market in Londonderry, New Hampshire. Coach, Inc. and Coach Services, Inc., purveyors of designer handbags and other personal goods, have sued Peter J. Sapatis, Londonderry Marketplace, LLC, Alaina E. Paul, and TABA Enterprises, LLC, seeking injunctive relief and damages based on alleged violations of federal and state law relating to trademarks, copyrights, and unfair business practices. Sapatis and Londonderry Marketplace move for summary judgment. I grant the motion in full with respect to Londonderry Marketplace and grant it in part and deny it in part with respect to Sapatis.
Most of the evidence presented by Sapatis and Londonderry Market concerns events surrounding Sapatis’s sale of the Flea Market to Paul and TABA in February 2008. In contrast, nearly all the evidence presented by Coach relates to events occurring after the sale.
A. Evidence Presented by Sapatis and Londonderry Market
Peter Sapatis has owned a large field and adjacent residence at 5 Avery Road in Londonderry, New Hampshire since at least 1991, when he established the Londonderry Flea Market as a sole proprietorship at that location. Doc. No. 30-2. The Flea Market operates nearly every weekend from April through October. In 2003, Sapatis formed Londonderry Marketplace, LLC, through which he operated the Flea Market until 2008. Sapatis has always been Londonderry Marketplace’s sole owner. Id.
On February 15, 2008, Sapatis’s daughter, Alaina Paul, and Londonderry Marketplace executed an Asset Purchase Agreement and bill of sale that transferred ownership of the Flea Market from Londonderry Marketplace to Paul for $100, 000. Doc. Nos. 30-3, 30-4. The Agreement specifies that Paul will pay $100, 000 to Londonderry Marketplace over a ten-year period, with interest accruing on the outstanding balance. Doc. No. 30-3. Paul contemporaneously assigned her entire interest in the Flea Market to TABA Enterprises, LLC, a company owned solely by Paul. Doc. Nos. 30-2, 30-5.
The sale of the Flea Market did not include the land upon which it operates. Doc. Nos. 30-3, 30-4. Paul and Sapatis contemporaneously executed a five-year commercial lease of all the land at 5 Avery Road exclusive of Sapatis’s home and the surrounding three acres. Doc. No. 30-6. The lease states that the property may only be used for the operation of an outdoor flea market. It specifies $36, 000 in annual rent, made in two equal payments each year on the first of June and November. Id.
Sapatis continued operating the Flea Market’s concession stand through the end of 2008, and then retired from the Flea Market. Doc. Nos. 30-2, 30-3. Londonderry Marketplace ceased doing business in 2009, ceased filing annual reports with the New Hampshire Secretary of State in 2011, and was administratively dissolved. Doc. No. 30-2. Sapatis has never been an employee of Paul or TABA or an employee or agent of any vendor at the Flea Market. Rather, TABA employs Linda Morrow to assist Paul with the Flea Market’s operations. Since 2008, all vendors have contracted exclusively with TABA, Sapatis has not derived any direct income from the Flea Market or its vendors, and Sapatis has not conducted any advertising for the Flea Market. He continues to volunteer his time at the Flea Market because he wants his daughter’s business to succeed, but he claims that he has had nothing whatsoever to do with the alleged sale of counterfeit goods at the Flea Market. Id.
B. Evidence Presented by Coach
Since the sale of the Flea Market to Paul and TABA in 2008, Paul has paid Sapatis $12, 000 each year toward the outstanding balance she owes him – currently $40, 000 - although she is unsure exactly how and when these payments have been made. Doc. Nos. 36-2, 36-4. Each of Paul’s payments is completely offset by an annual gift of $12, 000 that Sapatis makes to Paul. Id. None of these transactions have been recorded, and interest has never accrued on the outstanding balance. Doc. No. 36-4. The last time that Sapatis looked at the Asset Purchase Agreement was when it was executed in 2008. Id.
The $36, 000 in annual rent specified in Paul’s lease is paid to Sapatis out of the admission fees that customers pay to enter the Flea Market and the rent that vendors pay to operate their stands. Doc. No. 36-2. Sapatis, who keeps the Flea Market’s books, pays himself rent out of these proceeds and records the payments on Paul’s behalf. Doc. Nos. 36-2, 36-4. Paul has no involvement in the payments other than reviewing the records with Sapatis at the end of the year. Sapatis claims that he receives rent payments in the form of both cash and personal checks that he writes to himself in Paul’s name, whereas Paul claims that the rent payments are made solely in cash. Id. Contrary to the lease terms, the payments are not made in two equal annual installments because “we’ve changed to whatever is okay at the time.” Doc. No. 36-2.
Paul alleges that TABA has owned and managed the Flea Market since February 15, 2008 and that she receives mail for the Flea Market at 5 Avery Road. Id. Sapatis continues to reside at that address with his girlfriend Morrow, however, while Paul resides in Manchester. Doc. No. 36-4. The Flea Market’s business office is located in Sapatis’s home. Doc. Nos. 36-2, 36-4. It houses the Flea Market’s telephone line as well as its vendor policy manuals for 2010 and 2011, which are each signed “Pete Sapatis.” Id .; see Doc. No. 36-5.
Sapatis claims that he has retired and that Morrow is primarily responsible for the Flea Market whenever Paul is otherwise occupied, but Paul claims that Sapatis has never retired and continues to assist her alongside Morrow in the operation of the Flea Market. Doc. Nos. 36-2, 36-4. Sapatis buys supplies for the Flea Market; maintains the grounds; provides business advice to Paul; answers calls on the Flea Market’s main telephone line; keeps the books for the Flea Market (including forecasting future expenses and determining the Flea Market’s liquidity needs); shows potential vendors available spaces for rent in the Flea Market; mediates arguments amongst vendors, customers, and the police, including arguments concerning the sale of counterfeit goods; and circulates through the Flea Market “all weekend” to keep aisles clear, inform vendors of Flea Market policies, maintain relationships with long-term vendors, and collect vendors’ rent payments (including cash and checks made payable to either TABA or Sapatis himself). In short, Sapatis does “[a]lmost anything he thinks he needs to help [Paul] with, ” whether at Paul’s direction or not.
On June 26, 2011, two private investigators working for Coach, Andrea Powers and Michael Surette, arrived at the Flea Market and asked to speak to its owner. Doc. Nos. 35, 36-4. Sapatis was summoned and Powers and Surette informed him that counterfeit Coach products were being sold at the Flea Market. Id. Sapatis immediately called Morrow and a Londonderry police officer, who accompanied Powers and Surette while they inspected the Flea Market, purchased a number of counterfeit Coach products from vendors, and served these vendors with cease and desist orders. Doc. Nos. 36-1, 36-2, 36-4. Paul believes that she was working at the Flea Market’s concession stand at the time “[b]ecause that’s what I usually do.” Doc. No. 36-2.
On August 2, 2011, Coach sent a letter to the “Owner/Manager[, ] Londonderry Flea Market” alleging that counterfeit Coach products were being sold by Flea Market vendors and that those responsible for the Flea Market could be held liable if they failed to stop this unlawful activity. Doc. No. 36-1. Sapatis received this letter and attempted to contact Coach’s counsel to seek assistance in complying with its instructions, although Sapatis is unsure whether he actually spoke with a representative of Coach at this time. Doc. No. 36-4. In September 2011, Sapatis called Surette “on behalf of the flea market” and offered to pay him to conduct another inspection. Doc. Nos. 35, 36-4. After conducting this inspection without payment on October 9, 2011, Surette informed Sapatis that the Flea Market was “clean, but not to say that you’re going to stay th[at] way.” Id. Sapatis responded that he “eventually would like to get out of the flea market business.” Doc. No. 35. Surette assumed that Sapatis was still involved in the Flea Market’s management and operation. Id. Powers subsequently sent a letter to “Peter Sepatis [sic][, ] Owner[, ] Londonderry Flea Market” on November 9, 2011 containing trademark images for a variety of brands to assist him in identifying counterfeit products at the Flea Market. Doc. No. 36-7. Sapatis then called Powers to obtain additional copies of the letter, which he planned to distribute to vendors. Doc. No. 36-4.
On April 29, 2012, Surette visited the Flea Market a third time and purchased counterfeit Coach products from five vendors. Doc. Nos. 36-2, 36-3. After this unannounced inspection, Surette spoke with Sapatis about the ongoing sale of counterfeit products at the Flea Market. Doc. No. 36-2. On May 14, 2012, Coach mailed another letter, similar in content to the August 2nd letter, to the “Owner/Manager[, ] Londonderry Flea Market”. Doc. No. 36-3. Paul received this letter and shared it with Sapatis and Morrow. Doc. Nos. 36-2, 36-4. Sapatis then called Coach’s counsel seeking “help in taking care of this counterfeiting problem.” Doc. Nos. 34, 36-4. Neither Paul nor anyone associated with TABA ever communicated with Coach or any of its representatives prior to Coach suing Paul and TABA in June 2013. Doc. No. 36-2.
During discovery, TABA produced numerous email messages sent from the Flea Market’s main email address between February 27, 2011 and August 7, 2013. Doc. No. 36. Six hundred fifty-five of these messages identified Sapatis as the sender, whereas only forty-five messages originated from Paul. Id .; see, e.g., Doc. Nos. 36-8, 36-9, 36-10, 36-11. In response to one message from a customer asking whether counterfeit products of a particular brand were for sale at the Flea Market, Sapatis responded on June 26, 2012 that they were not, ...