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Citizens of Humanity v. Caitac Int'l

Court of Appeal of California, Second Appellate District, Division Two

August 3, 2010, Filed

B215232

Opinion

This appeal follows a jury verdict finding breach of contract, trademark infringement, and fraud with punitive damages against defendant Caitac International, Inc., and other related entities (hereinafter collectively referred to as Caitac). The jury found that Caitac breached its distribution agreement with plaintiff Citizens of Humanity, LLC (hereinafter, Citizens), which had required that defendant purchase for distribution in Japan minimum quantities of Citizens' fashionable premium denim apparel. The jury awarded Citizens damages in the amount of approximately $ 2.7 million for breach of contract, $ 2.1 for trademark infringement, $ 5 million for fraud, and $ 1.5 million as punitive damages.

Caitac principally contends:  [*2] (1) the trial court erred in its application of federal trademark law; (2) the trial court erred in its evidentiary rulings and jury instruction regarding the distribution agreement and in precluding some expert testimony; (3) Citizens failed to prove Caitac's fraudulent intent; and (4) the trial court erred in the admission of parol evidence to explain the meaning of contract provisions, and in precluding Caitac from pursuing its unpleaded defense of force majeure based on the economic downturn in the Japanese market for premium denim. We find the contentions unavailing and affirm.

FACTUAL AND PROCEDURAL SUMMARY

Evidence at trial.

Citizens is in the business of designing and producing denim fashion apparel. Citizens manufactures its denim jeans in the United States, uses an intensive wash treatment process, details the jeans with embroidery and stitching, and sells them in the price range of approximately $ 140 to $ 300.

Before the parties entered into the 2006 distribution agreement at issue in this lawsuit, they had an agreement in 2003. That agreement granted Caitac the right to distribute Citizens apparel in Japan through the end of 2005. The 2003 agreement did not impose any minimum  [*3] purchase obligations on Caitac.

In late 2005, the parties negotiated to renew the distribution agreement. Citizens, however, was not pleased with Caitac's level of sales or its efforts to sell Citizens apparel in Japan. Citizens advised Caitac that if it wanted to renew the distribution agreement, it would have to guarantee to purchase minimum levels of Citizens apparel.

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2010 Cal. App. Unpub. LEXIS 6194 *; 2010 WL 3007771

CITIZENS OF HUMANITY, LLC, Plaintiff and Respondent, v. CAITAC INTERNATIONAL, INC., et al., Defendants and Appellants.

Notice: NOT TO BE PUBLISHED IN OFFICIAL REPORTS. CALIFORNIA RULES OF COURT, RULE 8.1115(a), PROHIBITS COURTS AND PARTIES FROM CITING OR RELYING ON OPINIONS NOT CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED, EXCEPT AS SPECIFIED BY RULE 8.1115(b). THIS OPINION HAS NOT BEEN CERTIFIED FOR PUBLICATION OR ORDERED PUBLISHED FOR THE PURPOSES OF RULE 8.1115.

Prior History:  [*1] APPEAL from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. BC380930. Rita Miller, Judge.

Disposition: Affirmed.

CORE TERMS

termination, apparel, inventory, distribution agreement, trial court, trademark, merchandise, distributor, sales, license, brand, infringing, retailers, parties, orders, purchases, negotiations, discounted, force majeure, Lanham Act, cause of action, Products, extrinsic evidence, genuine, buy, trademark infringement, breach of contract, retail store, manufacturer, licensee