The Braille Monitor May 2005
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Held in Contempt of Court
by Barbara Pierce
For a decade now we have been reporting periodically on the more questionable activities of Maxi-Aids and its owner Eliot Zaretsky and various family members. In their most recent adventure Maxi-Aids, Elliot Zaretsky, and his son Harold have been adjudged guilty of contempt of court in a matter that suggests attempted identity theft by using the name of Independent Living Aids (ILA), a competitor company owned by Marvin Sandler, in Internet advertising in such a way that a relationship or link appeared to exist between the two companies.
Major Internet search engines like Google, Yahoo, AltaVista, and others were flooded with listings that read “Maxi-Aids-Independent Living Aids” and that advertised an “Independent Living Aids Catalog.” Of course, when potential customers asked for an Independent Living Aids catalog, they received a Maxi-Aids catalog. Maxi-Aids’ home page and other Maxi-Aids Web sites also contained similar listings, and with only one exception the words were spelled with initial capitals, as though referring to the name of the company Independent Living Aids.
Considering that this was neither Zaretsky’s first nor last appropriation of other organizations’ names and trademarked products, this seems a disturbing new direction in Maxi-Aids’ continued efforts to take unfair advantage of blind people, companies, and organizations serving the blind community. This article is a report of some of the issues brought to light in this latest confrontation between ILA and Maxi-Aids, which even included a charge of witness tampering made by Marvin Sandler, the president of ILA, against Elliot Zaretsky, the driving force behind Maxi-Aids. As we have done in previous reports of battles between ILA and Maxi-Aids, we rely on material directly from documents quoting the participants, with notes providing clarification and context so that our readers can form their own opinions. The article concludes with a summary assessment of the issues. We have not interviewed the principals in the story. Their views of each other have not changed nor have their assessments of Maxi-Aids’ behavior and Independent Living Aids’ response. As background to the contempt motion on which we are reporting, readers will recall that in December of 1997 Maxi-Aids, Elliot Zaretsky, and his son Mitchel were found guilty in federal court of copyright infringement, trademark infringement, false and misleading advertising, and unfair and uncompetitive business practices. This resulted in a jury award of $2,400,000.06 to ILA. Because of the serious nature of the case and its revelations of Maxi-Aids’ unethical conduct in our field, we devoted the entire Braille Monitor issue of March 1998 to the proceedings. This issue, as well as other editions mentioned in this article, can be accessed through the NFB Web site <www.nfb.org>.
Judge Arthur D. Spatt, who presided over the trial, affirmed the jury’s verdict and the monetary award and added reimbursement of legal fees, out-of-pocket expenses, and interest and issued a monetary judgment in favor of ILA against Maxi-Aids as a corporation and also against the Zaretskys personally in the amount of $2,779,806.96. In an effort to avoid paying ILA, Maxi-Aids and the Zaretskys then declared bankruptcy. The bankruptcy judge forced a settlement, and ILA eventually collected $1,600,000.
Simultaneous with the monetary judgment, Judge Spatt issued an injunction against Maxi-Aids, prohibiting the company from engaging in certain unfair business practices and activities. At about the same time the Veterans Administration (VA) issued a proposed debarment against Maxi-Aids because it had submitted documents claiming to be woman-owned in order to receive a competitive bidding advantage, and evidence at the ILA vs. Maxi-Aids trial showed that no woman had held even a single share of Maxi-Aids stock at the time this false claim was made. Along with the VA action the Rehabilitation Services Administration (RSA) issued a directive that effectively eliminated Maxi-Aids from participating in federally funded state vocational rehabilitation programs.
In an attempt to circumvent these actions by the VA and the RSA, Elliot Zaretsky created a sham company called Able-Vision, naming his daughter-in-law, under her maiden name, as the president. Documents later submitted to the court by ILA showed that Able-Vision had submitted bids in one state on which they won over $150,000 in contract awards. Since Zaretsky’s daughter-in-law’s alleged signature appears no fewer than thirty-three times on bid documents and since that signature is different from one that appeared on a sworn, notarized affidavit she later submitted to the court, one is prompted to wonder whether Harold’s wife even knew what was going on. Surely, if she had truly been part of Able-Vision and the bidding process, she would have signed the bid documents herself.
Adding to the unscrupulous conduct during the same period, Maxi-Aids and the Zaretskys began diverting charitably subsidized Perkins Braillers from South Africa to their U.S. customers, thus cheating the Perkins School for the Blind out of more than $400,000, of which more than $150,000 was a charitable subsidy contributed by the Hilton Foundation to help bring down the price of Perkins Braillers to underprivileged blind people in developing countries. So, not only did this damage Perkins, but it deprived blind people, particularly children in the developing world, since the Braillers that wound up in the Zaretskys’ hands did not go to their intended market.
Marvin Sandler of ILA learned of the Able-Vision and Perkins Brailler capers and through his attorney brought a motion to have Maxi-Aids and the Zaretskys held in contempt of court for violating the terms of the injunction issued by Judge Spatt. Although the case against Maxi-Aids had been thoroughly researched and documented, Judge Spatt reluctantly declined to hold the defendants in contempt of court, because his original injunction had been overly broad, and the law requires that an injunction be clear and unambiguous. When making this ruling, he said in open court, “...ILA has presented a thorough and persuasive presentation that strongly suggests that the defendants are indeed improperly obtaining subsidized Braillers intended for use in developing countries and selling them at retail prices in the United States... .” He then added, almost apologetically, that the fault was his own for issuing an overly broad injunction. We reported extensively on the contempt issue in the Braille Monitor issues of December 2001 and January 2002 and even included a victory statement written on the stationery of Maxi-Aids’ attorney beginning with a banner headline that triumphantly proclaimed “Maxi-Aids Is Vindicated.” The “vindication” did not last long, however, since the Perkins School for the Blind then sued Maxi-Aids (see the July 2002 Braille Monitor), and Maxi-Aids paid an unspecified amount of money to Perkins to settle the matter, as we reported in the January 2005 Braille Monitor.
It was during the contempt issue involving the Perkins Braillers that the first episode of Maxi-Aids and the Zaretskys’ confiscating someone else’s name came to light. Sandler learned and reported to the court that Elliot Zaretsky had incorporated a charity in New York State using the exact name of a legitimate overseas charitable organization and even using a copy of the organization’s stationery with his own name and the names of members of his family printed down the side of the stationery as members of the board of directors. In response Elliot Zaretsky submitted a sworn and notarized affidavit to the court stating that he had no connection with or relationship to the charity and gratuitously adding that he “is not on the board”--this despite the stationery with his and his family’s names listed as board members. Remember that at the original trial in 1997, having sworn to tell the truth under oath, Elliot Zaretsky testified before the jury that his daughter was the majority owner of Maxi-Aids. When confronted with federal income tax returns showing that his daughter didn’t own a single share of stock, he explained, “That’s only on paper.” It seems clear that, as demonstrated in 1997 and again in the Perkins Brailler matter, Mr. Zaretsky is often inclined to say what he finds convenient without much concern for the truth.
Independent Living Aids logo
Having briefly reviewed the history, let us turn to ILA’s second and more successful motion to have Maxi-Aids and the Zaretskys held in contempt of court. Since Judge Spatt had issued the original injunction, he presided over the initial hearings and made the final decision about whether the defendants had violated his injunction and were therefore in contempt.
The first hearing was held on March 15, 2002. Elliot Zaretsky was not required to be present, so he didn’t bother to attend. As a result his attorney Michael Solomon took the heat, and there was plenty of heat because Judge Spatt was breathing fire. The matter began with Jack Dweck, the attorney representing ILA, stating the complaint that “... Mr. Elliot Zaretsky and Maxi-Aids are using the Independent Living Aids name all over the Internet and on their own Web site.” Judge Spatt had already read the legal papers submitted on behalf of ILA. Following are some of the exchanges that took place between the judge and Mr. Solomon, beginning with Mr. Solomon’s asking for an adjournment because he needed more time to prepare. Judge Spatt responded, “Why do you need an adjournment...other than to give your client time to sell more products over the Internet using the words ‘independent living aids’?” This pretty much set the tone for the entire hearing, with Judge Spatt expressing a great deal of anger at what Elliot Zaretsky had done.
Mr. Solomon began by saying to Judge Spatt that the words “independent living aids” were generic and maintaining that other companies used the phrase. Judge Spatt responded:
“Your client was directed not to use the phrase ‘independent living aids.’ That’s what your clients was (sic) directed not to do by this court. I don’t care if fifty other companies use it, your company, your clients were directed not to use the phrase ‘independent living aids.’ And if a reasonably prudent company wanted to use that, notwithstanding this injunction, Mr. Solomon, if they came to you, you would say, ‘We’d better go back to Judge Spatt and see what he meant before we start plastering the world with the words ‘independent living.’”
Mr. Solomon then began an explanation of the Internet, and Judge Spatt told him: “This is a subject that you are much more familiar with than I am, obviously, so I’m learning about this. One thing I do know is about contempt law. I may not know the Internet well, but I know about violating a clear and definite order. That I know about. And I also know about the penalties for doing that.”
In explaining the workings of search engines, Mr. Solomon said that the words “independent living aids” constituted a generic phrase and repeated his claim that, without the ability to use that phrase, Maxi-Aids could not successfully advertise on the Internet. He concluded with the statement, “I don’t believe that the court ever intended to stop us.” Judge Spatt fired back: “The court intended to stop you from using the words ‘independent living aids.’ That is what the court intended because that is what it says. And I had my law clerk look up in the Webster’s Dictionary the word ‘living.’ It covers almost a half a column, where at least fifteen or twenty different words could be used for the word ‘living.’ And then we looked up ‘independent,’ and almost an equal amount could be found in Webster’s Dictionary. But strangely your client decided to pick the very words, at least concededly two of them, that I directed him not to use. Don’t you find that unusual, Mr. Solomon? If a client came to you in your office and showed you this judgment, told you that the client had just paid $1,600,000 to settle the case after a four-week trial, and said, ‘I want to use the same words,’ I think you would be cautious about that, wouldn’t you, Mr. Solomon?”
Judge Spatt then continued: “But of all the words in the dictionary for ‘independent living,’ synonyms, your client picked two of the words at least, and perhaps three, that I told him not to use. Now, if anything is contemptuous, that is.”
Mr. Solomon continued to ask for an adjournment so that he could have more time to prepare his case. Judge Spatt seemed to agree to allow more time but asked, “Is your client going to stop using the words ‘independent living aids’?”
Mr. Solomon responded, “What I will do is advise my client that... .”
Judge Spatt cut him off and roared, “No. You are not going to advise him anything. You are going to say that I’m directing them.”
Mr. Solomon backed off and said, “I was going to advise them that you directed, is what I’m going to tell them, Your Honor, that this is the court’s position with regard to this matter, and this is the law of the case as we speak. You have been advised not to, directed not to use ‘independent living aids.’ To the extent I can control it.”
However, Judge Spatt finished the colloquy with the words, “You will advise your client that, if I find your clients were in contempt, they will be subject to, one, disgorging profits; two, attorneys’ fees, including everything that is going on now and will enter the future; three, a substantial fine, which has been approved by the Second Circuit of up to $10,000 an (sic) a day in a copyright case. You will please advise your client of that, also.”
[Note that throughout the quotations above, the words “independent living aids” have been written in lower case, as transcribed by the court reporter. As mentioned earlier, all the listings on the Internet search engines used the words with initial capitalization, as in the name of the company, Independent Living Aids. The Maxi-Aids Web sites also used initial capitalization as in a name, with one exception. This one exception became the technicality that resulted in Maxi-Aids being let off the hook in one of the three areas in which ILA had alleged contempt.]
Because contempt of court is such a serious matter, the hearings were held under the criminal standard of “beyond a reasonable doubt,” which worked to Maxi-Aids’ advantage. Since the court had to adhere strictly to the criminal standard, Maxi-Aids was not found guilty of contempt for the listings on the Internet search engines. As described above, one of the main issues involved the listings on Google, Yahoo, AltaVista, and other search engines. The quotes from the transcripts seem to indicate clearly that Judge Spatt wanted them removed. Jack Dweck, the lawyer representing ILA, suggested that Maxi-Aids be required to notify the search engines in order to expedite the removal of ILA’s name in conjunction with Maxi-Aids and requested that this be included in a written order. Although Judge Spatt agreed in court, his written order did not include this requirement, and Maxi-Aids’ attorney later claimed that the written order was not clear and unambiguous. In other words, there was a reasonable doubt as to whether Maxi-Aids was required to notify the search engines. He made his point successfully with the court, and Maxi-Aids escaped being found in contempt on this point.
However, in the third area of contempt, regardless of how clever he was, Maxi-Aids’ attorney could not ward off a finding of contempt. Forty-five days after the original hearing in which Judge Spatt castigated Maxi-Aids and ordered it to remove all references to Independent Living Aids immediately from all advertising, ILA discovered that Maxi-Aids had created a new Web page called MaxiAids.com Affiliate Corner. Its purpose was to encourage companies with Web sites to link them to Maxi-Aids by using the words “Independent Living Aids” and promising a commission for all sales made by Maxi-Aids as a result of those links. Jack Dweck was outraged and told Judge Spatt that he saw this as an absolute challenge to the court’s authority. Judge Spatt concurred and said, “...if they recruit people to do things they are not permitted to do themselves under a court order, of course they may be responsible for that themselves as well... .” In the end, on November 26, 2004, Eliot Zaretsky was held in contempt in this matter.
The litigation stretched over two-and-a-half years, and a number of disturbing practices and improprieties came to light, but reporting them would be to little purpose since they were mostly isolated examples of arrogance and avarice. Two statements, however, made before Judge Spatt by Jack Dweck, the ILA attorney, may be worth reporting. Knowing of Judge Spatt’s love of football, Mr. Dweck made reference to Gayle Sayers, who Judge Spatt had argued was, pound-for-pound, the greatest halfback who ever lived. Mr. Dweck compared Elliot Zaretsky to Gayle Sayers and pointed out the ability of both to change direction with incredible ease and speed. Mr. Dweck could not have known at the time how prescient his remark would turn out to be. After reporting the discovery of the MaxiAids.com Affiliate Corner end run, Mr. Dweck also said, “Elliot Zaretsky is like a stalker, your Honor. That’s the only analogy I could make. He’s stalking Independent Living Aids. . .”.
A recent incident of which we have just been made aware seems to justify both of Mr. Dweck’s remarks. Even while the decision was pending in the ILA contempt motion, Elliot Zaretsky submitted an application for a federal trademark registration for the name “Say When” and has thrown in a registration application for “Hi-Mark 2000,” both applications submitted by a Zaretsky company called Reizen.
Say When liquid level indicators were invented at Kentucky Industries for the Blind (KIB) under the leadership of Dr. Tim Cranmer, until his death a leader in the National Federation of the Blind and a person whose memory is treasured by all those who knew him and respected the work he did in the blind community. The Say When liquid level indicator was patented and the name trademarked in 1985, before Maxi-Aids was even established. It is an insult and an affront to the memory of Dr. Cranmer that the name of a product that he developed in response to a need of blind people, which was then manufactured by blind workers, should now fall into the hands of a company that has distinguished itself by ethical practices that appear to many to be beneath reproach.
If Jack Dweck’s reference to Elliot Zaretsky as a stalker of Independent Living Aids is true, Zaretsky’s conduct toward Kentucky Industries for the Blind should be even more accurately described as stalking. As we reported in the March 1998 Braille Monitor coverage of the ILA vs. Maxi-Aids case, the director of Kentucky Industries for the Blind reported that in the early 1990’s Maxi-Aids began marketing a product called “Say Stop” at a lower price than Say When’s, and the similarity of the names was causing confusion among consumers. Kentucky Industries did nothing to protest, apparently in the hope that the problem would go away, but it didn’t. Evidence and testimony at the ILA vs. Maxi-Aids trial showed that Maxi-Aids then began counterfeiting Say When liquid level indicators by making a product similar to the Say When and advertising and marketing it under the name of Say When. Because the counterfeit was lower in price, Kentucky Industries for the Blind suffered a dramatic drop in sales. The director of Kentucky Industries told the Braille Monitor at the time that they eventually had to lay off several blind workers because of decreased sales. As reported in the March 1998 Braille Monitor article, Maxi-Aids had also begun to use the name of a KIB product named Hi Marks. This time KIB protested, so Maxi-Aids stopped using the name in its catalog. KIB continued marketing Hi Marks, but later changed the name to Hi-Mark 2000.
Kentucky Industries for the Blind has gone through several metamorphoses since the period when Maxi-Aids was counterfeiting Say Whens. KIB first became New Vision Industries for the Blind, and it has now been reorganized as part of LC Industries, a division of National Industries for the Blind. It is still located in the same building on the campus of the American Printing House for the Blind in Kentucky. We called Mike Johnson of LC Industries, who told us that its legal department was looking into the matter, and that they hoped and believed that they still owned the names, but that it was possible their trademark registrations for Say When and Hi-Mark 2000 might have lapsed during the transition in which the original Kentucky Industries for the Blind transformed itself into New Vision Industries for the Blind and then into LC Industries.
Should this be the case, it may be that Maxi-Aids’ appropriation of the name is legal, but surely not moral. Is it moral to counterfeit a product, then, when the manufacturer stops making it, grab the name and register it as your own? The name “Say When” has been instantly identified for so many years as a product made by the blind for the blind that surely it deserves the status of a star athlete’s number that is retired from use when the athlete no longer wears it. It is certainly in reprehensibly poor taste for the company that did much to cause KIB’s financial woes to appropriate the names of two of its best known products.
We conclude by summing up the three issues discussed in this article. The facts drawn from the documents have been laid out without inviting personal comment and accusation from the principals. Based on the documents in the case, if we were to award grades for what Maxi-Aids and Elliot Zaretsky have done, they would be three D’s--despicable, disgraceful, and disgusting. We rate the establishment of a so-called charity using the name of a legitimate charitable organization as despicable, especially since the action occurred at the beginning of the diversion of Perkins Braillers--so close to the beginning that we cannot help concluding that this scam was part of Zaretsky’s plan to acquire Braillers for sale in the States at the charitably subsidized price intended for people in the developing world. The attempt to use Independent Living Aids’ name in juxtaposition with Maxi-Aids’, so that some sort of relationship appeared to exist between the companies, was disgraceful. But we reserve our harshest word--“disgusting”--for the blatant appropriation of a recognized and respected name in our industry.
It is commonly acknowledged that God forgives; it’s the nature of the business He’s in. We in the National Federation of the Blind, however, are in a different business. We are the blind speaking for and acting on behalf of the blind--advocating, helping, protecting, and encouraging. The Braille Monitor reports the news as we see it, and we believe that we have an obligation to alert blind people to wrongdoing when we find it in our community. We have condemned Elliot Zaretsky’s use of the name of a legitimate overseas charity for his own purposes as despicable, and we hope that the real charity will take appropriate steps. We have labeled the attempted identity theft of the name of Independent Living Aids as disgraceful, but we do not feel compelled to protect Marvin Sandler or Independent Living Aids. They seem to be doing a pretty good job on their own, and they have a lot of Elliot Zaretsky’s money to prove it. But we do believe that the appropriation of the names of Say When and Hi-Mark 2000 is a direct attack on blind people and on the blind community and should be condemned in the strongest terms. It is time for good people to say “no,” and it should be a loud and clear “no” so that Elliot Zaretsky will get the message once and for all.
To those who read this article with bemused interest but do nothing, we say, as long as you deny that a problem exists or simply ignore it, you are shirking the duty we all have to deal with it, and it will continue to plague our community. As for those who believe that diverting Perkins Braillers from needy people in developing countries and cheating the oldest school for the blind in this country out of more than $400,000 is okay, who believe that setting up a so-called charity using the name of a legitimate charitable organization is not so bad, who believe that counterfeiting a product and then taking over the name of that product is acceptable business practice, we think you are tacitly supporting activities that will eventually hurt you if they have not already done so. We took our stand more than ten years ago when Dr. Jernigan wrote in this magazine that the National Federation of the Blind would not buy anything at all from Maxi-Aids, even when they had the lowest price, until they cleaned up their act. We hope that people of conscience will write, call, or email Maxi-Aids to express their moral outrage and that they will do whatever else they can think of to let Elliot Zaretsky know that cutting ethical corners and taking advantage of others in our industry are unacceptable. Blind people face enough challenges in obtaining equal opportunity that we do not need people within the field placing obstacles in our paths.
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