Newmark Realty Capital, Inc. v. BGC Partners, Inc. et al, No. 5:2016cv01702 - Document 424 (N.D. Cal. 2018)

Court Description: ORDER RE: 407 DEFENDANTS' RESPONSE FILED PURSUANT TO COURT'S ORDER DENYING IN PART PLAINTIFF'S MOTION FOR CONTEMPT. Signed by Judge Beth Labson Freeman on 6/22/2018. (blflc4S, COURT STAFF) (Filed on 6/22/2018)
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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 SAN JOSE DIVISION 8 9 NEWMARK REALTY CAPITAL, INC., Plaintiff, 10 v. United States District Court Northern District of California 11 12 BGC PARTNERS, INC., et al., Defendants. 13 Case No. 16-cv-01702-BLF ORDER RE: DEFENDANTS’ RESPONSE FILED PURSUANT TO COURT’S ORDER DENYING IN PART PLAINTIFF’S MOTION FOR CONTEMPT [Re: ECF 407] 14 15 The Court previously denied in part Plaintiff’s Motion for Order to Show Cause Why 16 17 Defendants Are Not in Civil Contempt of the Court’s Preliminary Injunction Order (“Motion for 18 Contempt”). Order, ECF 401. In the Order, the Court raised concerns regarding (1) Defendants’ 19 description in a February 2018 press release about their services and (2) Defendants’ display of 20 “Newmark” in their invitation for and during the cocktail reception at a Commercial Real Estate 21 Finance/Multifamily Housing Convention & Expo (the “CREF Conference”) that was held on 22 February 2018. See Order 19–20, 22–23. Defendants were allowed to submit a response because 23 they did not have an opportunity to address the relevant evidence submitted by Plaintiff. Id. at 23– 24 24. The Court has reviewed Defendants’ Response (ECF 407) and addresses the two issues 25 below. 26 The February 2018 Press Release: The Court raised a concern that one of the press 27 releases identified by Plaintiff abbreviates Newmark Group, Inc. as “Newmark” and states under 28 the “About Newmark Group, Inc.” heading the following: 1 2 3 4 Newmark is a full-service commercial real estate services business that offers a complete suite of services . . . across the entire commercial real estate industry. Newmark’s investor/owner services and products include capital markets . . . and, under other trademarks and names like Berkeley Point and NKF Capital Markets, government sponsored enterprise lending, loan servicing, debt and structured financing and loan sales. 5 Order 19–20 (citing Ex. 8 to Yip Decl. at ECF 202-8, ECF 202-9). The Court stated that 6 Defendants may use trademarks like Berkeley Point and NKF Capital Markets to offer 7 “government sponsored enterprise lending, loan servicing, debt and structured financing and loan 8 sales,” but the statements that “Newmark is a full-service commercial real estate services business 9 that offers a complete suite of services . . . across the entire commercial real estate industry” and “Newmark’s investor/owner services and products include capital markets” suggest that 11 United States District Court Northern District of California 10 Defendants provide mortgage services under the “Newmark” brand in violation of the preliminary 12 injunction order. Id. at 20. 13 Defendants explain that the above language was drafted to comply with the injunction 14 order. Response 1. According to Defendants, the language at issue is used only for corporate 15 announcements involving Newmark Group, Inc.’s strategic acquisitions and earnings 16 announcements but not for press releases describing Defendants’ brokerage operations. Id.; 17 Lewis Decl. ¶¶ 4–5, ECF 407-1. Defendants state that out of the 165 press releases posted on their 18 website in 2018, only six include the “Newmark Group, Inc.” description at issue. Id. ¶ 6. Of the 19 six press releases, one relates to a corporate acquisition of a sales and leasing brokerage and the 20 other five concern communications with shareholders about quarterly earnings. Id. Defendants 21 further contend that the description at issue was drafted to provide a consolidated overview of the 22 “various offerings provided by companies under the Newmark Group, Inc. umbrella” and to make 23 clear that the trademarks of Newmark Group, Inc.’s subsidiaries provided “services that could be 24 arguably covered by the injunction.” Response 1–2. For these reasons, Defendants assert that 25 there has been no violation of the injunction. Id. 26 Nevertheless, in light of the Court’s concern, Defendants have created a new template 27 description to make clear that “Newmark Group, Inc. is a public holding company that operates 28 through its subsidiaries and that all subsidiaries providing mortgage services do so under the 2 1 Newmark Knight Frank and Berkeley Point names.” Response 2. Specifically, Defendants stated 2 that they will use updated language which is reproduced below with annotations: 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 Ex. 1 to Lewis Decl., ECF 407-1. 23 In light of Defendants’ explanation, the Court finds that the Newmark Group, Inc. 24 description at issue fails to constitute clear and convincing evidence showing that Defendants’ use 25 of that description was “not based on a good faith and reasonable interpretation of the [injunction] 26 order.” United States v. Bright, 596 F.3d 683, 694 (9th Cir. 2010) (holding that the party alleging 27 civil contempt must demonstrate by clear and convincing evidence that the contemnor’s conduct 28 was not the product of a good faith or reasonable interpretation of the order). Here, Defendants 3 1 properly understood that they are not permitted to use “Newmark” as a trademark to denote the 2 source of certain mortgage-related services. Despite the inaccuracy in their description, it is 3 apparent that Defendants intended to avoid the impermissible use of “Newmark” by indicating that 4 Newmark Knight Frank and Berkeley Point provide mortgage-related services. Moreover, 5 Defendants used the Newmark Group, Inc. description only in press releases that do not directly 6 discuss commercial real estate transactions. Lewis Decl. ¶¶ 4–5. As such, the Court concludes 7 that the deficiency in the language at issue does not warrant a finding of contempt because 8 Defendants’ use of that language was the product of good faith and reasonable interpretation of the 9 injunction order. Bright, 596 F.3d at 694. 10 Further, the Court is satisfied with the updated language proposed by Defendants. The United States District Court Northern District of California 11 new description makes it clearer that Newmark Group, Inc. operates through its subsidiaries as a 12 full-service commercial real estate service business with a complete suite of services and products. 13 Ex. 1 to Lewis Decl. Defendants also have clarified that the subsidiaries of Newmark Group, 14 Inc.—as opposed to “Newmark”—provide capital market services. Id. As such, the new language 15 addresses the concern raised in the Order. 16 Defendants ask the Court to allow them to maintain the past press releases without 17 replacing or deleting the language at issue. Response 2. The Court, however, does not find that 18 updating the past press releases would be overly burdensome. Defendants represent that there are 19 only six press releases at issue. As opposed to releases that have already been filed with the SEC, 20 Defendants have direct control of the webpages displaying the press releases. Revising those 21 webpages would not be costly or technically difficult. Therefore, Defendants shall promptly 22 modify the webpages that display the six press releases containing the description at issue. 23 The CREF Conference Cocktail Reception: The Court raised a concern regarding the 24 display of “Newmark” in the invitation and during the cocktail reception at the CREF Conference. 25 Order 22. Defendants assert that there was no violation of the preliminary injunction order 26 because Defendants neither created the invitation nor hosted the reception. Response 3. 27 According to Defendants, the use of “Newmark” at issue was conducted by Cantor Commercial 28 Real Estate (“CCRE”) which is affiliated with Defendant Newmark & Co. Real Estate, Inc. only 4 1 through the common ownership of Cantor Fitzgerald, L.P. Id. Defendants contend that they do 2 not exercise control over CCRE and that the invitation at issue was created by a CCRE 3 administrative assistant who was unaware of the injunction. Id. On this basis, Defendants assert 4 that the use of “Newmark” was a result of “inadvertent, innocent human error by a non-party.” Id. 5 Defendants further represent that they would not have allowed the use of the logo at issue for the 6 cocktail reception. Id. (citing Lewis Decl. ¶¶ 13, 18). 7 The Court is satisfied with Defendants’ explanation and concludes that the evidence 8 regarding the cocktail reception at the CREF Conference does not warrant a finding of contempt. 9 On its face, the preliminary injunction order is applicable to Defendants and does not expressly enjoin CCRE from using “Newmark” for certain mortgage-related services. See Mod. Prelim. Inj. 11 United States District Court Northern District of California 10 Order 43, ECF 262. At this juncture, there has been no showing that Defendants exercise control 12 over CCRE. Moreover, Defendants represent that they have implemented a policy of not using the 13 “Newmark” logo for industry events that might be connected to debt and equity financing and that 14 Cantor Fitzgerald’s marketing department is aware of this policy. Even if CCRE were subject to 15 the injunction, the display of “Newmark” in the invitation and during the cocktail reception 16 appears to have been an inadvertent violation due to the error of CCRE staff who did not obtain 17 approval from the marketing department (see Lewis Decl. ¶¶ 14–17). Gen. Signal Corp. v. 18 Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986) (holding that inadvertent violations of an 19 order do not constitute contempt). Under these circumstances, the Court finds that Plaintiff has 20 not established by clear and convincing evidence that Defendants are in contempt of the injunction 21 order because the staff of non-party CCRE inadvertently used the “Newmark” logo for the cocktail 22 event without the involvement of the marketing department. Defendants represent that they have 23 communicated with Cantor Fitzgerald’s Chief Marketing Officer to ensure that all CCRE 24 materials are approved by the marketing department and that CCRE will use the NEWMARK 25 KNIGHT FRANK logo in future events. See Lewis Decl. ¶¶ 17–18. 26 For the foregoing reasons, the remainder of Plaintiff’s Motion for Contempt is DENIED. 27 In light of the above discussion, Defendants shall promptly modify or remove the webpages that 28 display the six press releases containing the “Newmark Group, Inc.” description at issue. The 5 1 Court recognizes that complying with a preliminary injunction order in this case involves a 2 complex process. The Court expects Defendants to expend reasonable efforts in good faith to 3 comply with the injunction order. 4 5 6 7 IT IS SO ORDERED. Dated: June 22, 2018 ______________________________________ BETH LABSON FREEMAN United States District Judge 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6