Patsy’s Brand, Inc. v. I.O.B. Realty, Inc.

Patsy’s Brand, Inc. (Patsy’s) (plaintiff) sued Patsy’s Pizzeria, I.O.B. Realty, Inc. (I.O.B.), and its principals, Frank Brija and John Brecevich (defendants) for trademark infringement. Patsy’s alleged that after it began selling sauce under the name Patsy’s in 1994, the defendants also began selling sauce under the same name. Patsy’s sought a preliminary injunction to stop the defendants from selling sauce under the same name. Brija submitted an affidavit in opposition, claiming that the defendants had sold the sauce with the same label since 1993. Patsy’s reply papers pointed out that the label the defendants claimed to have used since 1993 contained information that was unavailable until 1998. I.O.B.’s counsel disavowed the affidavit and withdrew from representation. The United States District Court for the Southern District of New York granted the preliminary injunction. I.O.B. then hired Pennie & Edmonds LLP (P&E) as its attorneys. The attorneys at P&E were aware of the false statements in Brija’s earlier affidavit and questioned Brija and Brecevich about it. Brija insisted that the sauce label had been created in 1993 but that a later version of the label had been submitted to the court by mistake. Brecevich corroborated Brija’s account. Patsy’s later filed a motion for summary judgment. In opposing the motion, P&E submitted a second affidavit from Brija, in which he again attested that the label had been created in 1993. The district court found Brija’s second affidavit to be undeniably false. The district court granted summary judgment for Patsy’s and sua sponte issued an order to show cause why sanctions should not be imposed on P&E pursuant to Rule 11 of the Federal Rules of Civil Procedure (FRCP).