Beauty Enterprises, Inc. v. Sara Gregory

United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted August 26, 2020 *
Decided August 28, 2020
Before
MICHAEL S. KANNE, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
AMY C. BARRETT, Circuit Judge
No. 19-3491
BEAUTY ENTERPRISES, INC.,
Plaintiff-Appellee,
v.
SARA GREGORY,
Defendant-Appellant.
Appeal from the United States District
Court for the Northern District of Illinois,
Eastern Division.
No. 16-cv-2523
Robert W. Gettleman,
Judge.
O R D E R
Beauty Enterprises, a distributor, sued Sara Gregory, a market analyst in the
beauty and personal care industry, for fraudulent misrepresentation and fraudulent
concealment. Specifically, it alleged that Gregory made false statements about Carol’s
Express, a beauty-product brand, and that it purchased Carol’s Express products in
reliance on those statements. Beauty Enterprises further alleged that Gregory concealed
* We have agreed to decide this case without oral argument because the briefs
and record adequately present the facts and legal arguments, and oral argument would
not significantly aid the court. F ED. R. A PP. P. 34(a)(2)(C).
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1

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a trademark infringement claim against Carol’s Express. After a bench trial, the district
court entered judgment in favor of Beauty Enterprises. We affirm.
We recount the facts stipulated to in the joint pretrial order and as presented at
trial. Gregory represented the Carol’s Express product line for inclusion in a special
program at CVS Pharmacy to feature hair and skincare products for African-American
consumers. CVS suggested that Gregory use one of its vendors, Beauty Enterprises. On
June 5, 2008, Gregory and Rocco Piccirillo, a Beauty Enterprises executive, discussed by
phone Beauty Enterprises serving as Carol’s Express’s distributor for CVS’s program.
Beauty Enterprises thereafter entered into a contract with Carol’s Express to buy its
products for distribution. Over a month later, Gregory received a letter from Carol’s
Daughter, a manufacturer of high-end beauty products, instructing Carol’s Express to
cease and desist from use of its name and logo, which imitated that used by Carol’s
Daughter. But Carol’s Express still shipped its products to Beauty Enterprises, which
accepted them and paid about $80,000. Beauty Enterprises then distributed the products
to CVS. Not until October did Gregory tell Beauty Enterprises that Carol’s Daughter
had sued Carol’s Express for trade and service mark infringement. At that point, Beauty
Enterprises recovered the Carol’s Express products shipped to CVS, refunded CVS, and
returned the products to Carol’s Express. Carol’s Express reimbursed Beauty
Enterprises for some of its handling fees but did not reimburse the purchase price or
shipping costs.
In 2012, having already obtained a default judgment against Carol’s Express and
Gregory’s consulting company in a Connecticut court, Beauty Enterprises sued Sara
Gregory personally in Illinois state court. Litigation proceeded until late 2015, when
Beauty Enterprises, for an unknown reason, dropped the case after jury selection.
Beauty Enterprises then filed this suit in federal court in February 2016. (Gregory refers
to this lawsuit as having been “removed” from state court, but this is an original action.)
In her answer, Gregory demanded trial by jury, but her demand became less
clear over time. For example, at a status hearing in October 2018, counsel for Beauty
Enterprises asserted, “We don’t think there’s a jury demand,” and the district court
mistakenly agreed, saying, “Oh, there isn’t. You know something, you’re right.”
Counsel for Gregory did not correct the mistake. But when the bench trial began on
September 10, 2019, Gregory’s counsel began by objecting to the proceeding because
Gregory had demanded a jury trial in her answer. The court overruled the objection,
concluding that Gregory had waived a trial by jury. It reminded counsel that the signed

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joint pretrial order was for a bench trial and that the court had said, “This is a bench
trial,” at a pretrial conference in March 2019 (to which counsel replied, “I understand.”).
At the two-day bench trial, the parties gave conflicting testimony about the
June 5, 2008, phone call. According to Piccirillo, Gregory said Carol’s Express had the
same owner (Lisa Price) as Carol’s Daughter but operated as a separate entity because
Carol’s Daughter did not want to dilute its prestige by selling its products at retail
stores like CVS. Piccirillo testified that he took notes during the call, so his counsel
refreshed his recollection with those notes (and Piccirillo answered, “Yes” when asked
if his memory had been refreshed). Over Gregory’s objection, the district court allowed
him to read the notes aloud as his recorded recollection pursuant to Federal Rule of
Evidence 803(5). The notes contained a diagram with “Lisa” at the top-center. From
there, a line pointed left to “Carol’s Express” and a line pointed right to “Proven line
Carol’s Daughter.” Below “Carol’s Express” was “Sara,” and below that were “CVS and
Walmart.” Below “Proven line Carol’s Daughter” were the words “Ethan and Sephora.”
Piccirillo also pointed to Gregory’s follow-up email, in which she called Carol’s
Express the “retail expression of Carol’s Daughter” and directed Piccirillo to “please
visit www.CarolsDaughter.com.” Gregory also described Carol’s Daughter as the
“department store counter-part” of Carol’s Express. Piccirillo thought this meant that
Price owned both brands; he provided examples of manufacturers spinning off a
product line as the “retail expression” of a higher-end product. Although Gregory
referred to Carol’s Express as a “complete and separate entity,” Piccirillo testified that
he thought Price simply was operating the two businesses separately. Piccirillo testified
that he relied on Gregory’s representations because, after knowing her for around ten
years in a business capacity, he admired and trusted her.
Gregory, on the other hand, testified that she did not discuss ownership of
Carol’s Express with Piccirillo at all. She denied telling Piccirillo that Carol’s Express
and Carol’s Daughter were related or had the same owner. Further, she testified that
she “never thought” that Carol’s Express and Carol’s Daughter were affiliated. She
testified that the phrase “retail expression” was a common industry expression used to
mean “similar to.” When asked what she meant when she wrote, “[Carol’s Express]
functions as a complete and separate entity with corporate offices in New York,”
Gregory testified that she meant that “it was a different company.” If the companies
had been affiliated, Gregory testified, she would have “used the word ‘owned.’”
Gregory also admitted receiving a cease-and-desist letter from Carol’s Daughter
on July 28, 2008, asserting that Carol’s Express’s trade dress was similar enough to

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Carol’s Daughter’s to make consumers falsely believe the products were associated. The
letter was addressed to Carol’s Express, Donyale Bush (the owner of Carol’s Express,
who was also Gregory’s stepson), and Gregory’s company. Gregory’s attorney
responded to Carol’s Daughter’s counsel on August 11, 2008. A few days later, Gregory
allowed Carol’s Express to ship its products to Beauty Enterprises. Gregory stipulated
that she did not inform Beauty Enterprises about the infringement claim until October
2008, when she told Piccirillo that, pursuant to a court order, Carol’s Express’s products
should be recovered from CVS and destroyed.
After trial, the district court entered its findings of fact and conclusions of law
under Federal Rule of Civil Procedure 52(a)(1). The court concluded that Beauty
Enterprises had proven both claims. Crediting Piccirillo’s testimony over Gregory’s, it
found that Gregory had told Piccirillo that Carol’s Express and Carol’s Daughter had
the same owner, even though Gregory knew this was false. Gregory’s follow-up email,
which stated that Carol’s Express was the “retail expression” of its “department-store
counterpart” Carol’s Daughter, was also misleading; it falsely assured Beauty
Enterprises that Carol’s Express had permission to market its infringing products. And
so, Gregory’s false representations induced Beauty Enterprises to contract with Carol’s
Express. Beauty Enterprises’ reliance was reasonable, the court further found; Piccirillo
had no reason to doubt Gregory’s statements because of her position and their past
business relationship. The court also determined that Gregory had a duty to disclose the
cease-and-desist letter, which would have allowed Beauty Enterprises to avoid losses. It
entered a judgment of $118,518.09 in favor of Beauty Enterprises.
On appeal, Gregory (now representing herself) makes four arguments. First, she
contends that she was improperly denied a trial by jury. But, given her counsel’s
statements and conduct at multiple pretrial conferences and assent to the jointly filed
final pretrial order, the district court did not err in determining that Gregory waived
her right to a jury trial. See FED. R. C IV. P. 38(d). Counsel’s failure to object and overall
course of conduct waived the jury demand in Gregory’s answer. See Fillmore v. Page,
358 F.3d 496, 503 (7th Cir. 2004).
Second, Gregory argues that her attorney provided ineffective assistance. Despite
any purported errors by counsel (including waiving a jury trial), however, Gregory
cannot attack the civil judgment against her in this way. There is no Sixth Amendment
right to effective assistance of counsel in a civil case. Stanciel v. Gramley, 267 F.3d 575,
581 (7th Cir. 2001). The “exclusive remedy” for an unsatisfied client in a civil case “is a

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suit for malpractice or for breach of fiduciary duty,” Bell v. Eastman Kodak Co., 214 F.3d
798, 802 (7th Cir. 2000), though we do not opine whether there are grounds here.
Third, Gregory argues that Piccirillo’s notes about the June 5, 2008, telephone
conversation were inadmissible. Upon our review of the trial transcript, Gregory is
correct: the district court elided the distinction between past recollection recorded, see
FED. R. EVID. 803(5), and present recollection refreshed, see FED. R. EVID. 612. Specifically,
when Piccirillo agreed that his recollection had been refreshed by the notes, the court
erred by allowing Piccirillo to read directly from his notes. See 28 FED. P RAC. & P ROC.
EVID. § 6184 (2d ed.) (counsel should retrieve the writing after the witness’s memory has
been refreshed and before the witness testifies); cf. United States v. Muhammad, 120 F.3d
688, 699 (7th Cir. 1997) (no error where admitted testimony stemmed from agent’s
personal knowledge and not from the written report used to refresh her recollection).
Further, the court incorrectly applied the “recorded recollection” exception to the rule
against hearsay to Piccirillo’s notes. First, Piccirillo did not testify that he now could not
recall the content of the notes well enough to testify about them fully and accurately (in
fact, he said that his recollection had been refreshed). See FED. R. EVID. 803(5)(A). Second,
although Piccirillo testified that the notes related to his phone call with Gregory, he did
not explicitly state that the notes were accurate. See FED. R. EVID. 803(5)(C).
But in light of the rest of the evidence against Gregory, this evidentiary error was
not prejudicial. See FED. R. C IV. P. 61. On the first day of the bench trial, without
reference to notes, Piccirillo testified about the contents of the phone call, including
Gregory’s statement to him that Lisa Price was the common owner of Carol’s Express
and Carol’s Daughter. Further, the evidence included, and Gregory does not challenge
the admission of, the email in which Gregory called Carol’s Express the “retail
expression” of its “department store counter-part” Carol’s Daughter.
Last, Gregory asserts that Beauty Enterprises “fail[ed] to mitigate damages,” but
this is a misnomer for her argument that Beauty Enterprises’ reliance on Gregory’s
statements was unjustified because it did not independently investigate the ownership
of Carol’s Express. We review the district court’s findings after a bench trial for clear
error. FED. R. C IV. P. 52(a)(6); Kreg Therapeutics, Inc. v. Vitalgo, Inc., 919 F.3d 405, 418
(7th Cir. 2019). The court did not clearly err in finding that Beauty Enterprises justifiably
relied on Gregory’s representations. Nothing put Piccirillo on notice that he should
doubt the word of Carol’s Express’s marketing representative, who could be assumed
to know who owned the brand, so the district court reasonably found that his reliance
was justified. See Benzakry v. Patel, 77 N.E.3d 1116, 1129–30 (Ill. App. Ct. 2017). And

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Gregory does not challenge the court’s findings regarding her other statements
implying an affiliation with Carol’s Daughter.
AFFIRMED

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