Jury Finds Dealer Broke the Golden Rules
When a local jewelry market moved next door to one of Orange County’s largest diamond dealerships and tried to operate under a similar name, the result was a business rivalry that at times bordered on the absurd and resulted in a $2.05-million verdict against the upstarts, attorneys said Wednesday.
The allegations were ordinary and the jury award wasn’t especially large. But what was unusual about the case was how far both sides were willing to go to do battle, spending hundreds of thousands of dollars in court and attorneys fees alone, those involved said.
As a result, one company declared bankruptcy and the other might never see a penny of the money awarded to them by the Orange County Superior Court jury.
“It would have been almost comical had it not been the worst experience of my life,” said William S. Doddridge, who founded Jewelry Exchange, a $45-million company that’s the largest of its kind based in the county.
The conflicts began in 1994 when a Jewelry Exchange employee defected to a competitor, attorneys for both sides said.
Former employee Darlene Lindstrom helped the rival firm move in next door in Santa Ana and begin encroaching on the company’s trade name, said F. Elliot Goldman, an attorney for Jewelry Exchange. The new business called itself 14K Jewelry Mart Exchange, and played the words “Jewelry” and “Exchange” in especially large type, Goldman said.
And if that wasn’t bad enough, Jewelry Mart employees would go into the Jewelry Exchange’s parking lot to solicit customers, telling many that both stores were one and the same--and then steering them inside their store, Goldman said. The battle reached its pitch when 14K Jewelry Mart hung a blue tarp over the Jewelry Exchange’s sign, so customers would mistakenly believe that business was closed or had moved next door, Goldman said.
Jewelry Exchange retaliated by hauling a trailer branded with the store’s name in front of the rival business, which responded by putting a truck of its own in front of the trailer.
“We sent in somebody to tow the truck, and [a 14K Jewelry owner] was sitting in the truck, smoking a cigarette,” said Doddridge, chief executive officer of Goldenwest Diamond Corp., the parent company of the Jewelry Exchange. “Every day we went to work, there was something different. We didn’t know what to expect.”
At one point, there were giant balloons, trucks and trailers each proclaiming that their store was the Jewelry Exchange, Goldman said.
Goldman said the dispute had a devastating impact on the Jewelry Exchange, which lost an estimated half-million dollars in business during the 1994 Christmas season--traditionally one of the busiest times of the year.
That was when Jewelry Exchange owners decided to move to Tustin and take their case to court.
A jury decided Tuesday that the company should receive more than $2 million from the jewelry mart that unfairly resorted to using the Jewelry Exchange’s own trademark to siphon off business.
Next month, a judge will decide whether the jury’s verdict was fair and finalize the judgment, which is normal in trademark cases.
“The company can’t compete against itself,” said Goldman, adding that the verdict sends a message that businesses cannot mislead and confuse consumers.
Jason Gulvartian, general manager of 14K Jewelry Mart, said his company was basically caught in the middle. When he hired Jewelry Exchange’s former employee, he didn’t know that she was feuding with her old boss, he said.
He explained the tarp incident this way: It was a way of taking revenge against Jewelry Exchange’s attempts to gather up evidence for its case by videotaping customers in the parking lot.
Gerald Shaw, attorney for 14K Jewelry Mart, said Jewelry Exchange may have won the verdict, but victory belongs to his clients. In a related ruling, a judge decided that Gulvartian and his stepfather, who operate the store, were not responsible for the business’ actions.
“The battle was fought to absolve the individuals [of 14K Jewelry Mart] of any liability,” Shaw said. “We succeeded in doing that.”
There’s also little hope that his client will pay the $2-million verdict, Shaw said.
The 14K Jewelry Mart, which still has branches in El Toro and San Juan Capistrano, is operating under bankruptcy protection. “There’s no assets for the other side to recover,” he said.
At least one customer remains angry.
Annie Dawson of Riverside said her husband went into 14K Jewelry Mart believing that he was actually shopping at the Jewelry Exchange when he bought her a 1.2-carat diamond ring. It wasn’t until a complaint about the quality of the ring arose that the Dawsons learned they had been misled.
“This is what my husband gave me and I’m going to enjoy the ring,” Dawson said. “I didn’t know that we had not bought it from the Jewelry Exchange until one of their attorneys contacted us about our experience. . . . I never thought that anybody could be lying to us about a thing like that.”
Thao Hua can be reached at (714) 564-1033 or at thao.hua@latimes.com
