Report from the Trenches
by Marvin Sandler
From the Editor: The Tuesday afternoon, July 7, general session of the 1998 convention was memorable for several reasons: an excellent presidential report, stirring speeches by a federal judge and a sailor, and a moving, spontaneous tribute to Dr. Jernigan by those contributing to the new Jernigan fund. This last event necessitated radical alterations in the agenda, and one of the things that disappeared entirely as a result was a brief presentation by Marvin Sandler, President of Independent Living Aids (ILA), who was leaving the convention later that evening.
Since the ILA vs. Maxi-Aids suit seems destined to drag on in one form or another for months to come, it is appropriate for us to print here the remarks Mr. Sandler did not have the opportunity to deliver. This is what he would have said:
I'm the President of Independent Living Aids, which some of you know by our initials, ILA. I've been given the opportunity to speak to you for a few minutes about the lawsuit that we filed against Maxi-Aids and the Zaretsky family during February of 1995. The case went to trial during early November of 1997, and the jury handed down its verdict on December 8, 1997, after five weeks of trial and two and one half days of deliberations. The jury found in our favor on four counts, two federal claims (copyright infringement and trademark infringement) and two New York State claims (materially deceptive acts and practices and false and misleading advertising). They awarded ILA $2,400,000.06.
The lawsuit was covered extensively by the Braille Monitor, which devoted the entire March, 1998, issue to the case. The NFB is the only organization in this field which reported on this case. Not a word has appeared in any other journal or publication in our field. This is an organization that has beliefs and the guts to express those beliefs in print to its membership and to the outside world. In the Braille Monitor article of December, 1994, which was published before this lawsuit began, Dr. Jernigan and Mrs. Pierce wrote, "We long since stopped buying anything at all from Maxi-Aids, even if their price was the lowest to be had. We did this because we did not like their behavior or dealings." That message has been repeated in the latest Braille Monitor, which was just published last week. Now, that's putting your money where your mouth is, and that's guts.
Perhaps other organizations have either not fully understood the ramifications of this lawsuit to their constituents or didn't think it was important enough to write about. Perhaps they have thought that it was simply a spitting war between two companies and that the issues involved did not affect the blind community as a whole. The NFB clearly thinks differently.
Those of you who have had the opportunity to read the Braille Monitors of December, 1994, and March, 1998, will recall that one of my complaints against Maxi-Aids was that they had consistently beaten us on a number of bids by the identical figure of six cents. You will recall that the award given by the jury was $2,400,000.06. When I went to thank the jury, the foreperson said to me, "I hope you appreciate the six centsthat was to let them know that we know." I've had phone calls from people who have said, "I just loved the six cents," or "That six cents was cute." Let me assure you that it wasn't something cute or something to loveI believe it was a recognition by the jury that something was wrong, that an offense had been committed, and that they were letting Maxi-Aids know that "they knew."
There is something else about which everyone should be aware. On each of the claims that we made against Maxi-Aids the jury was asked if Maxi-Aids's conduct and actions were willful, and in each case the jury unanimously answered, "Yes." They were asked if Maxi-Aids had willfully infringed on our copyrights, and they unanimously answered, "Yes." They were asked if Maxi-Aids had willfully committed trademark infringement, and they unanimously answered, "Yes." What Maxi-Aids and the Zaretskys did were not the actions of people who didn't realize what they were doing and who accidentally transgressed. The jury held that the actions of Maxi-Aids and the Zaretskys were willful and deliberate and intentional.
Some people who have spoken to me have given me the impression that they feel that the issues raised in this lawsuit do not affect them. Well, just read the jury's verdict on our claims, and you can begin to understand that I fought this case, not only for ILA, but also for you, the consumers. Question twelve that was posed to the jury by the judge was, "Did the plaintiff (ILA) prove that the defendant Maxi-Aids engaged in materially deceptive acts and practices with regard to the advertising and sales of its products?" and the answer given by the jury was, "yes." Next they were asked, "Did the plaintiff (ILA) prove that the primary injury resulting from the said deceptive acts and practices were suffered by the public?" and again the answer was, "Yes." Next they were asked, "Did the plaintiff ILA prove that it also was injured by the said deceptive acts and practices?" and once again the jury said, "Yes." Finally they were asked, "Did the plaintiff ILA prove that the defendant Maxi-Aids acted willfully when it committed the deceptive acts and practices?" and again the answer was a resounding, "yes." Is this a little spitting war between two competitors, and something that doesn't affect consumers? No way!
Remember that question, "Did the plaintiff (ILA) prove that the primary injury...was suffered by the public," and the answer, "Yes." You were first; ILA was second. That was the way the judge phrased the questions, and that was the way the jury answered. This was a battle that I fought, not just for me, but also for you.
When someone says that this was a private war between two competitors and that you, the consumers, were not affected, remember what was presented and proven at trial. Watches made in Hong Kong were advertised by Maxi-Aids as made in Switzerland. They were shipped to consumers like you packed in boxes that said, "Swiss" and had warranties that stated that the watches were made in Switzerland. When consumers placed orders for "Magna Wonder Knives," they received an off-brand knife known as a "Dux" knife, but the invoice that accompanied the shipment listed the product as a "Magna Wonder Knife." The evidence at the trial proved this. When a customer ordered a "Tab Grabber," which is a device that will open the tabs on pop-top soda cans and will also open soda bottles, they received a product with an invoice stating that a tab grabber was being shipped. However, the product itself was only a can opener that would not open a soda bottle, but someone at Maxi-Aids had pasted the name "Tab Grabber" right over the original manufacturer's label that said, "Can Opener."
So don't let anyone tell you that you the consumers are not affected. Just look at the Hong Kong watches advertised as Swiss, the "Dux" knives substituted for "Magna Wonder Knives" and the can openers substituted for "Tab Grabbers." And the list goes on and on and on. We've also uncovered customs fraud and counterfeiting, which I'll describe in a few minutes.
There is another aspect to the jury's verdict about which you should be aware. The jury held Elliot Zaretsky and his son Mitchel Zaretsky and his daughter Pamela Zaretsky Stein to be personally liable, along with Maxi-Aids, their corporation. What this means is that the jury recognized that the responsibility lay individually against the Zaretsky family, who are the owners and officers of Maxi-Aids, and they will not be allowed to hide behind the corporate shield. In a world in which people deny responsibility and shuffle responsibility onto others, the jury recognized and ruled that the Zaretskys bore individual responsibility for the actions taken in the name of Maxi-Aids.
Now let me bring you up to date on what has happened since the time of trial. As might be expected, Maxi-Aids's attorneys have filed motions with the courtthree in all. The first requests that the jury's verdict be set aside, which is the same thing as asking that it be overturned. The next is that, if they don't get the first, the jury award should be reduced to what they feel is a more realistic figure, $14,132. Can you imagine, they want the amount reduced from a verdict rendered by a jury who sat through five weeks of trial and who deliberated for two and one half days, and they claim that it should be reduced from $2,400,000.06 to $14,132. Finally, they have requested a new trial on the issue of whether my statement to the Braille Monitor back in 1994 constitutes libel.
On our side we have also filed motions. We have filed papers opposing the motions filed by Maxi-Aids and the Zaretskys. We have also filed motions seeking the recovery of our legal fees, asked for a permanent injunction to prevent Maxi-Aids from continuing to engage in the practices of which they were found guilty, and asked for the confiscation and destruction of all of their infringing catalogs. These motions are to be argued at a hearing before the judge on July 17, and I'm sure that the October issue of the Braille Monitor will carry an article detailing the results of the judge's final ruling.
It's almost a certainty that Maxi-Aids and the Zaretskys will appeal if the judge's rulings go severely against them. At that point the matter will go to the United States Court of Appeals, which consists of three judges, who will then consider the entire case and who will rule on whether the jury's verdict and award plus the judge's rulings on the verdict and award should be upheld or reduced.
Part of a lawsuit involves a process called discovery. This includes demands made by each side for documents as well as depositions, which are sworn answers to questions given by the other side's attorneys and which are then used at trial. During the course of the discovery process we have obtained information that has led us to believe that there were additional transgressions by the Zaretskys which were not part of our original lawsuit. As a result we have filed a new action against Maxi-Aids, Elliot Zaretsky, and Mitchel Zaretsky under the RICO statutes. RICO is an acronym used by the government, which was named after Rico Benadelli, who was the gangster played by Edward G. Robinson in the movie, Little Caesar. It stands for Racketeer Influenced and Corrupted Organization.
We have come across documents that lead us to believe that Maxi-Aids and the Zaretskys have been engaging in customs fraud. We have in our possession six sets of invoices which were prepared in duplicate by one of Maxi-Aids's overseas suppliers. Each set consists of two invoices on which the invoice numbers are identical and the merchandise is identical in both catalog number, quantity, and description. However, on one invoice the pricing for each item is about half the pricing on the other. There are cover sheets attached, apparently written by the overseas supplier, which state that there are duplicate invoices enclosed "as per your request," with the higher-priced invoice to be used for payment and the other for customs purposes, which, because of the lower prices written on it, would naturally carry lower customs duties. There is also a caution, "Do not mix the two." That's pretty serious stuff. We contend that it is customs fraud.
We've also come across something that we contend is counterfeiting. You all know the Say When® liquid level indicators. They were invented at Kentucky Industries for the Blind, and they are made by blind workers. We have uncovered evidence that Maxi-Aids and the Zaretskys were counterfeiting this product, making it on their own, and passing it off as genuine Say Whens® from approximately 1990 until 1995. In conversations with Robert Byrd, who was at that time running Kentucky Industries for the Blind, we have been advised that sales of the genuine Say Whens® by Kentucky Industries for the Blind dropped so precipitously that three blind workers had to be laid off. We, as suppliers to people who are blind, have an obligation to support those who support us. As I speak to you today, ILA is the only major mail order house still supplying the genuine Say Whens®.
As I end my remarks today, I want you to know that I will continue my efforts to make the playing field level in our industry. Ours is an industry that needs self-policing, and this was stated emphatically by Dr. Jernigan in the Braille Monitor article of December, 1994. I don't want to kid you; I didn't file my lawsuit against Maxi-Aids and the Zaretskys because of altruism. It all began because Elliot Zaretsky called me up and, speaking in a voice that I can only describe as ominous, told me that he was not happy about things that he claimed I had said about him. He said, "You've been saying bad things about me, and you better stop." He then told me that I better keep my mouth shut.
That was all I needed to hear, and twenty minutes later I was on the phone with my lawyer. I was outraged that in this day and age someone could feel so powerful that he could call with impunity and tell me to keep my mouth shut. So that's how it startedin the beginning it really was more a spitting war between two personalities than anything else. However, during the discovery phase we found things that led us to believe that Maxi-Aids was acting in a way that was unfair to you, the consumer, as well as to ourselves and was giving our industry a bad name. So our interests, yours and mine, coincide. Unfair acts hurt both of us. There's a saying in the lawit's in Latin, and I never got beyond my high school Amo, Amas, Amat, so I can't give you the exact words. However, it roughly translates in English into, "He who works for himself also works for the king." What this means is that, in trying to protect ILA's interests, I am also protecting yours.
I think that the last paragraph of the March, 1998, Braille Monitor expressed it well when it stated that now everyone knows what's been going on. I pledge that ILA will do everything we can to root out improper practices that affect you, our customers, in an adverse manner. Our industry needs self-policing, and we will do our share. When you read updates about our RICO lawsuit against Maxi-Aids and the Zaretskys, I want you to know that we are fighting not only for ourselves but also for you.