Lokai Holding v. Sundberg et al, No. 1:2021cv04466 - Document 22 (S.D.N.Y. 2021)
Court Description: OPINION & ORDER re: 14 MOTION to Dismiss or in the Alternative to Transfer. filed by Rachel Sundberg, Brett Sundberg. Defendants' motion to transfer to Utah is granted. (Signed by Judge Louis L. Stanton on 11/22/2021) (rro) Transmission to Office of the Clerk of Court for processing.
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Lokai Holding v. Sundberg et al Doc. 22 ORlG\NAL 'I lft;SDC ~DN\:' I D()(T\!F\T UN I TED STATES DI STR I CT COURT SOUTHERN DISTRICT OF NEW YORK LO KAI HOL DINGS , LLC, Pl a intiff , ! ELi· ( 1 RO' IC.-\ l LY FILED ' DOC #: 1 oATE f--1L-E_o-:- 11 ...... 11,- ~---;r-1--, - - against BRETT SUNDBERG , RACHAEL SUNDBERG , AND DOES 1 - 10 , 21 Civ . 04466 (LLS) OPIN I ON ORDER & De f endants . Plaintiff Lokai Holdings , LLC brings cla i ms unde r the Lanham Act and New York law against defendant s Brett Sundberg , Rachael Sundberg and Does 1 - 10 (coll ective ly , "defendants " ) f o r their unauthorized sale of allegedly counterfeit copies of plaintiff ' s trademarked bracelets . Defendant s move to dismi ss the claims agai n st them under Federal Rules of Civil Procedure Alter ac · vely , defenda United Staces Distric s 2 (b )( 2 ) , ( 3 ) and ( 6 ) . ove to era sfer c e accer o e Court for the District of U ah, purs a c to 28 U. S.C. § 1404 . For the reaso s s a ed be ow , defe .dants' trans=er is gra o ion o ed . BACKGROUND According to the Complaint, plaintiff i s a manufactu rer a nd seller of a variety of unique bracel ets , known as "Lokai Bra celets" . Compl . ~ 13 - 16 . Plaintiff own s v al id trade ark registrations for several of the Lokai bracelets . _d . Defendants , ~ _ 6- 2 . . through an onlin e st o refr ont c alled "PE YT EYBUG" , available on the online marketplace " JANE . COM ", offer for sale - 1- Dockets.Justia.com unauthorized copies of plaintiff 's Lokai bracelets . Id . 33 , 46 , ~ 31 - 56 - 60 . Plaintiff discovered the allegedly infringing bracelets on defendants ' website around December of 2020 , and sent a letter to the online marketplace , JANE . COM , requesting the counterfeit goods be removed from the site . Id . 39 - 40 . A representative ~ from the website responded to plaintiff 's request , explaining that the products were removed , and providing plaintiff with PEYTEYBUG ' s contact information . Id. ~ 41 - 42 . On Decembe r 28 , 2020 , plaintiff ' s counsel se n t defendants a cease - and - desist demand . Id . ~ 42 . Since that time , d efe ndant s stopped se lling th e counterfeit product s, and s ubsequently reported to plaintiff the sales figure s of the infringing bracelets , although def e nda cs failed to re port to plain ~ff 's counsel al _ colors of che bracelets offered on the sc orefront and how long che bracelecs According to defendan s, ave been o:fered . Id . ~ 43 - 50 . the sale o : che al egedly infring·ng bracelecs o -Y generaced in cotal S2,237 . 87 i Br . at ~ prof~t . See D: . 11. After the Complaint wa s fi l ed, the parties attempted to se ttle the matter , but d isc u ssi on s between th e parties brok e down when def e ndan ts ceased to provide the requested sales information and became non - responsive . Comp 1. 4 9 . Defendant s now move to di s mis s the claims a gainst them for improper venue , lack of personal jurisdiction and failure to - 2- state a claim , or to transfer the case to the District of Utah . The case should be transferred to Utah . DISCUSSION 1. Defendants argue that their out - of - state associations make venue improper in this District . In this case , defendants operate the PEYTEYBUG business from their home in Utah . See Of . Br . at~ 2 , Ex . A at~ 3 . PEYTEYBUG sells its women ' s and children ' s fashion accessories solely through the online marketplace JAN E . COM . Of . Br . at~~ 2 , 4, Ex . A at ~3 . Defendants do not maintain any business office s, brick and mortar locatio .s, or distribution centers in New York or anywhere else in the world . Of . Br . at~ 4 , Ex . A at~ 5 . PEYTEYBUG has no e ployees besides Defendant Rachael Sundberg , and Ms . Sundberg has never traveled to ew York for purposes of conducting b siness =or PEY EYBUG. Of . Br . aL 6, 9. 8, Ex . A a 51:. Defe dants do, however, pro ote and advertise the braceleLs i e w Yor hro g h operat~on o = Le webs~Le, w ~c. ~s accessible to people in New York . Although venue in this District is proper, the Court may , "For the convenience of parties and witnesses , in the interest of justice , [ ] transfer any civil action to any other district or division where it might have been brought ." 28 . s.c . § 1404 (a ) . 28 U. S . C . § 1404(a) gives district courts wide latitude to - 3- decide whether to transfer venue . See Everlast World ' s Boxing Headquarters Corp . v . Ringside , Inc ., 928 F. Supp. 2d 735 , 743 (S . D. N. Y. 2013) . " In deciding motions to trans f er , courts inquire , first , whether the action could have been brought in the transferee district and , if yes , whether transfer would be an appropriate exercise of the Court ' s discretion ." Id . (internal citations and quotation marks omitted ) . Under 28 U. S . C . 139l (b) (1 ) , this action could have been brought in the Di stri ct of Utah , si nce all defendant s reside in Utah . See 28 U. S . C . 139l(b ) (1) ( "A civil action may be b r ought in (1) a jud i cial di stri ct in which any defendant resides, if all defendants are residents of the State in which the di s trict is located . " ) . The second step of the 1404 (a ) analysis invites the Court to balance nine factors to determine whether transfer is a valid exercise of discretion . The cact ors the Court typically considers include : " ( 1 ) conve. ience of witnes ses; convenience of che parcies ; (2 ) ( 3 ) loca ion of relevanc docu encs and the relative ease of access to sources of proof ; locus of the operative facts; (5) the availability of process to compel the attendance of unwilling witne sses; means of the parties ; ( 4) the (6) the relative (7) the comparative familiarity of each district with the governing law ; (8 ) the weight accorded to plaintiff's choice of forum ; and ( 9 ) judicial ec onomy and che interests o f justice ." Freeplay Music , LLC v . Gibson Brands , - 4- Inc ., 195 F . Supp . 3d 613 , 616 (S . D. N. Y. 2016) . On balance , those factors favor transfer to Utah . 2. "The convenience of witnesses is an important consideration , and has often been described as the single most important§ 1404(a) factor ." Everlast , 928 F . Supp . 2d at 743 . In a trademark infringement action , the " most critical witnesses may be those officers and employees who were involved in the sale of the [ allegedly] Quiksilver , Inc ., i nf ringing products . " . ESP N, 581 F . Supp . 2d 542 , 548 (int ernal citation and quotation Inc. v . (S . D. N. Y. 2008 ) arks omitted) . Here , defendant s have demon stra ted that the pertinent witnesses are in Utah . Rachael Sundberg - the individual accused of selling he infringing produc s- lives in Ut ah, with her husband , and i s c e ch~e =, if. o so l e, employee o= PEY _E YB "G, ocher than h er ch· dren , who assisc, and a fa ily friend _oca ed in Utah who "occasionally helped out " . See Of . Br . at 11 ; Ex . A at ~g 4 - 6 . Plaintiff doe s no eaningfully contest those fac s . There f or e , the convenience of witnesses favors of transfer . "A defenda nt moving f or transfer must s how both that the origin al forum is inconvenient for it and that the plaintiff would not be substa nt ial ly inconvenienced by a transfer . " Everlast , 928 F . Supp . 2d at 744 ( S.D . . Y. 2013) (ci a ion omitted) . A motion to t ra nsfer "should not be granted if all transfer would accomplish is to shift the inconvenience from one - 5- party to the other. " Guardian Life Ins . Co . of Am . v . Hernandez , No . 11 CIV . 2 114 SAS , 2011 WL 3678134 , at *3 (S . D. N. Y. Aug . 22 , 2011) . Defendants have shown that a transfer would not merely shift the inconvenience from one party to the other : defendants are individuals , not a large corporation . They state that they have limited means and resources to litigate this matter , especially where the cost of traveling to New York for the purpose o f litigati o n ma y ex c eed the v alue of actual damages i n t h e case . Se e Df . Br . at 1 2 . 3. " The location of the operative event s i s a primary factor in determining a § 1404( a ) motion to tran s fer ." Sma rt v . Goo r d , 21 F . Supp . 2d 309 , 316 ( S . D. . Y. 1998 ) (citation omitted ) . This factor weighs heavily in :avor of transfer fro. he district when a par y "has not shown that any of the operative :acts arose in the Sou hern Distric ationwide Ins ., of ew York ." Dr . Boy GmbH v . o . 96 Civ . 3217 (AGS ) , 996 WL 35 0 699 , at ~2 (S . D. N. Y. June 25 , 1996) . Plaintiff a s serts that Ne w York i s t he locu s of ope ra tive facts s ince the " fact s concerning the brand and intellectual property ,, are in ew York and some of the allegedly infringing items were ordered :ro and shipped o ew York (albeit a nominal amount equaling roughly 114 of 8 , 592 products , see Ex . A ~ 12 - 13 ) . Plaintiff argues that the " majorit y ,, of courts in t hi s - 6- District have held that in cases where sales have been made in the district , the initially chosen forum is the locus of operative facts , even where sales have been made in other districts 22 - 23 (as they have here, see Ex. A~ 13 ) . See Pl . Br. at (citing Am . Eagle Outfitters , Inc. v . Tala Bros . Corp ., 457 F . Supp. 2d 474 , 477 (S . D. N. Y. 2006 ) (" In trademark infringement cases , courts in this District have found that the l o cus of operative facts weig h s in fav o r of maintaining the o ri g inal v e nu e wher e t h e de f end a nt s e lls th e alle g e dly infringing product s in t h a t fo r um ." )) . Several court s in thi s Dist r ict h a ve found that hold i ng "not persuasive ", and in s tead held chat if " there a re roughly equivalen sale s of an a llegedly infringing product in ultip _e districts , each such di s trict has a roughly equivalent cl a i to being the locus of operative facts ." CYI , Inc . v . Ja - Ru , Inc ., 913 F . Supp . 2d 6, 2 {S . ~ . . Y. 20_2 ) ; accord Enigma So:cware Grp . USA , L~C v . Ma warebytes ( S . D. = c ., 260 F . Supp . 3d 40: , 410 - 1 . Y. 20 _ 7 ) ( "':'' .e Court decL.nes co find t ac the locacio of con s ume rs fa vo rs Ne w Yo rk wh ere only a small fracti o n o f con s umers of the product at i ss ue bought th e product iss u e in , or are located in , New York ." ) ; Alpha I ndu s ., Inc . v . Alpha Clothing Co . LLC , o . 21 CIV . 87 (KPF) , 2021 WL 2688722 , a t *7 - 8 (S . D. N. Y. June 30 , 2021) (" While the Court recognizes that sales did occur in thi s District ., that consideration is accorded ' substantially diminished weight ' - 7- in light of Defendants ' submissi o n that its sales were nationwide . ) . Based on the sales data before the Court , 1 . 33 percent of the total accused product sales occurred in New York , 3 . 4 percent occurred in Utah , and the remainder occurred in other states . Of . Br ., Ex . A~ 13 . Given those facts , there are a number of districts with a " roughly equivalent claim" to being the locus of o perative facts. Viewed in conjunction with the o ther facts c o ncerning defenda n ts ' al l egedly infringing a c t iv ities , th e l oc u s o f o p e ra tiv e f ac t s fa vo rs tra n sfer t o Utah , where defend a nt s o r d ere d t h e a ll ege dly in fr ingin g good s, where they operate the PEYTEY BUG we b s it e , a nd from wh e r e th e bracelets are packaged and shipped to purchas e rs . See Cartier v . D & D Jewelry I por s , 510 F . Supp . 2d 344 , 346 ( S . D. . Y. 2007 ) ( locu s o= operative fact weighed in favor of transfer fro ew York where defendants were loca ed in California , its web s ite wa s operated out of California , a nd th e allegedly infringing items were shipped fro Freeplay _ usic , ~C California ) ; see also v . Gibson Brands , =nc . , _95 F . Supp . 3d 613 , 619 (S . D. N. Y. 2016) ( " [E]ven though s ome operative fact s occurr e d in New York where the copyright s are own e d and where the a lleged injury occurred , the Court i s per s u a d e d that mo s t of the operative fact s weigh in favor of tran s f e r to Tenne ss ee ." ) 4. For the reasons d es cribed in conn e ction with the c o nvenience o f the parties , the relative means of the parties - 8- fa vo rs Utah . De f endants are indi v iduals , not corporations , who have declared that defendant Rachael Sundberg is a stay-at-home mom who only generated $2,237.87 in profits from the sale of the accused products. See Of . Br ., Ex . A. i i 3 , 12 . Plaintiff , on the other hand , appears to be a mul t i-million-dollar corporation (see Izen Deel . at i 15 , stating "To date , Lokai has generated " ) and i 16 , discuss in g millions of dollars in revenue . plaintiff ' s donation of $8 million , comprising 10 % of its net p r o fits ) and h as ma d e n o a n a logou s c l ai m o f fi n a n c i a l h arm i n pur s uing its claims in Utah . 5. While defendants ' busine ss record s and information regarding the purcha s e and sale of the a llegedly infringing prod cts are loca ed in Utah , see D: . Br . at 1 - 2 , "the location of docu e ts and records is not a co pelling considerat~on when records are easily portable . " Astor Holdings , Inc . v . Roski , o . 01 CIV . 1905 (GEL ) , 2002 WL 72936 , at *12 (S . D. . . Y. Jan . 17 , 2002 ) . Therefore , thi s factor is neutral. 6. Under Rule 45 of the Federal Rule s of Civil Pr ocedure , a di s trict court generally can only i ss ue a s ubpoena that would compel a non - party witne s s to travel within 100 mile s of the state in which the witne ss resides , i s employed , or regular_y tran s acts busines s in person . Fed . K. Civ . P . 45 (c ) ( l ) (A) . Ho wever , "[w]here there is no indication that non-party - 9- witnesses will refuse to appear , courts will consider the availability of process to compel the attendance of witnesses a neutral factor ." See Alpha Indus ., Inc ., 2021 WL 2688722 , at *9 (internal citations omitted) . Neither Plaintiff nor Defendants have concretely identified particular non-party witnesses who are unwilling to testify . 1 Even if a witness declines to testify , "deposition testimony is a viable alternative ." NBA Properties , Inc . v . Salvino , Inc. , No . 99 CIV . 11799 AGS , 2000 WL 323257 , at *8 (S . D. N. Y. Ma r. 27 , 2000) . This factor thus has little bearing on the Court 's determination . 7. While a plainLiff's choice of forum "is entitled to signirica nt consideration and will not be disturbed unless other factors weigh strongly in favor of transfer" , Royal & S nalliance v . Br~ ish A~rways, 167 F . S pp . 2d 573, 576 (S . D. . Y. 2001 ) , Lha- choice" erits le ss deference where the connecLion beLween Lhe case and Lhe chosen foru is mini al ." Everlast , 928 F. Supp . 2d at 748 (internal (S . D. N. Y. 2013) citation and quotation marks omitted) ; see also D' Anton Jos , S.L. v . Doll Factory, Inc., 937 F . Supp. 320 , 323 (S.D . N. Y. : De=enda~cs Sr~e= staces, "~e=endants are _o cated in Uta h , as are :~ke: y nw~lli .g ) wicnesses associaced wich ~e=endancs" , and cheir Kep: y states, "8 t to che exte plain i== · n e .. ds co cal crial w · nesses chac include employees o= J ane, Bre c (who should no be na ed as a parcy a all ) , or Rachael 's family friend . . . these witnesses will all presumably be unwilling to testify voluntarily at trial . . " See Df . Br . at 13 ; Df . Reply Br . at 8 . This is not concrete evidence of a non - party witnesses ' unwillingness to testify. -1 0 - 1996) (" [A]lthough a plaintiff ' s choice of forum is generally given substantial weight , this presumption does not apply in cases such as this one where there is little material connection between the chosen forum and the facts and issues of the case ." ) . In this case , plaintiff , who maintains its principal address in New York (Compl. ~ 5) , chose to bring the action in the Southern District of New York , presumably since this District is the most convenient for Lokai . However , given the abo v e stated facts showing that New York lacks a strong, material connection to the cause of action, this fact o r does not sig ni fica ntly s hi ft the balance in favor o f retention . 8. Utah is equally competent to hear de fe ndant s' federal Lanham Act claims . Plaintiff doe s rai se two ew York sta te law causes of action, which favors retaining the case in the Southern District of ew York . See WL 323257 , a - ...-9 _ ( " Where , as here , BA Properties , Inc ., 2 00 0 here are s taLe law claims , the forum's familiarity with governing l aw s upport s retention of the action ." ) (internal citations and quotation marks omitted ) . Thi s factor thus we igh s sl ightly against tr a n sfer. See ESP, Inc . v . Quik s ilver , Inc ., 581 F . Supp . 2d 542, 55 0 - 51 (S . D. . . Y. 2008 ) (no ing that this is one of the least i porLanL factors ) . CONCLUSION Defendants ' motion to transfer to Utah is granted. -11- So Ordered . Dated : New York , New York November 22 , 2021 Louis L . Stanton U. S . D. J . - 12 -
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