Bonita Fabrics, Inc. v. Kirat S. Anand, an Individual, dba Kas New York, No. 1:2012mc00408 - Document 12 (S.D.N.Y. 2013)
Court Description: OPINION re: 3 MOTION to Dismiss filed by Kirat S. Anand, an Individual, dba Kas New York. Upon the facts and conclusions set forth above, the Defendant's motion to dismiss is denied without prejudice to renewal following jurisdictional discovery. (Signed by Judge Robert W. Sweet on 4/19/2013) (cd)
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK x 12 Misc. 408 BONITA FABRICS, INC., OPINION Plaintiff, against KIRAT ANAND, AN INDIVIDUAL, DBA KAS NEW YORK, Defendant. ---------- X A P PEA RAN C E S: aintiff Donald Pearce, 260 Madison Avenue, 17th Floor New York, NY 10016 By: Donald Pearce, Esq. Defendant SABHARWAL & FINKEL, LLC 350 Fifth Avenue, 59th Floor New York, NY 10118 By: Adam Finkel, Esq. Rohit Sabharwal, Esq. , .. ..... v_......._·__ -~~-···'" " Swee t , D. J . , Defendant Kirat S. Anand ("Anand" or the "Defendant") has moved pursuant to Rule 12 of the Federal Rules of Civil Procedure to dismiss the miscellaneous proceeding brought by Plaintiff Bonita Fabrics, Inc. ("Bonita" or the "Plaintiff"), and to quash subpoenas issued in connection with the proceeding. Plaintiff requests that the motions be denied or, in the alternative, that jurisdictional discovery be granted. Upon the conclusions set forth below, the motion is denied without prejudice and jurisdictional discovery is granted. I. Background and Prior Proceedings The instant miscellaneous matter arises from an action by the Plaintiff in the United States District Court for the Central District of California (the "California Court") , Case No. 11 Civ. 7594 (the "California Action"). Bonita is a California corporation with its principal place of business in Los Angeles, California. 1 Bonita is a fabric wholesaler and employs several full time designers California. Bonita applied for and received a copyright registration for Design No. 50653 ( "Design") on April 5, 2007 and assigned Registration Number VA 1-634 587. From 2007 to 2009, Bonita sold to Forever 21, one of the largest chains of junior's retail stores worldwide, approximately 100,000 yards at a wholesale price in excess of $600,000. In May 2011, Bonita learned that certain garments bearing allegedly unauthorized reproductions of the Design (the "Accused Garments") were being sold on four separate websites, including www.swirl.com by Daily Candy Commerce, LLC ("Daily Candy"), www.shopstyle.com, www.edressme.com and www.rue .com. Bonita has alleged that Anand, doing business as KAS NEW YORK, sold the Accused Garments on above-mentioned websites and in dozens of stores in California, including boutiques such as Fred Segal and Scoop, and larger department stores located throughout California including Neiman Marcus and Bloomingdale's. Bonita has contended that Anand had, and may still have, a sales representative in Los Angeles and exhib 2 and sold goods at the California trade show "Designers and Agents." It is also alleged that Anand frequently travels to California for business and/or pleasure. Bonita has also noted that KAS NEW YORK's website states: Who is KAS? KAS was created by the brand's namesake and founder, Kirat S. Anand. Born and raised in New York with no formal training, Kirat knew that he wanted to make an imprint on the fashion world . Realizing a void in the luxury/ contemporary woman's ready-to-wear market, he launched KAS NEW YORK in 2007. (See Def. Memo. at 3). In addition, Anand's user submitted profile on Linkedln.com lists that he is the "Designer and Owner at KAS NEW YORK." According to Bonita, in November 2011, it discovered that KAS NEW YORK was not a legal entity and that no person or entity had filed a fictious name statement for KAS NEW YORK. In his fidavit, Anand has contended that he, as an individual, does not do business as KAS NEW YORK. Instead, according to Anand, a separate and distinct business corporation, Dani II, Inc. ("Dani II"), a garment wholesaler, owns various labels including KAS NEW YORK. 6). (Anand Aff. ~~ 3 Anand has admitted that he is the current President of, and a shareholder in Dani II. (Anand Aff. 3 ~ 6). Dani II is a corporation formed under the laws of the State of New York with s principal place of business at 101 32 Dupont Streetl Plainview NY 11803. (Anand Aff. ~ 2). In addition l Anand has so stated that his website does not state that he is doing business as KAS NEW YORK. (Anand Aff. ~ 4). Anand has contended that "Plaintiff has not provided a scintilla of evidence to support that KAS NEW YORK is owned by Kirat Anand or is an assumed name belonging to Kirat Anand") and thus he is a wrongfully named defendant in the instant action and the California Action. On May 271 2011 1 Bonita sent a cease and desist letter to KAS NEW YORK demanding that KAS cease its infringement and provide documentary evidence customers and profits. its supply source Ex. 1). 1 sales l By letter dated June 71 2011 1 Anand responded to the letter but did not provide any of the requested information. (Pl. Ex. 2). Bonita sent a subsequent letter on July 13 1 2011 1 which went unanswered. (Pl. Ex. 3). Anand hired three separate attorneys who communicated with Bonita/s counsel at various times over the course of the next year. According to Bonita l attorneys for Anand advi Bonita/s counsel that KAS NEW YORK was not a legal entitYI but 4 that Dani II should be the defendant in any action alleging infringement. Bonita responded by asking for proof of the proper entity to be named as well as documentary evidence of sales, customers and profits. counselors eventual Bonita has contended that Anand's advised that their client would not reveal the names of his supplier, customers, or provide the back-up sales documents. On March 2, 2012, Bonita received an Order to Show Cause issued by the California Court indicating that the rst Amended Complaint ("FAC") would be dismissed unless a default judgment was requested. By email dated March 2, 2012, Bonita provided Anand's counsel with notice of the Order to Show Cause and also advised that Bonita would file default papers in the following week. (Pl. Ex. 9). Anand did not respond to the FAC within the permitted time period. A clerk's default was entered by the California Court on March 16, 2012. (Pl. Ex. 10). By letter dated June 19, 2012, Anand sent a letter to the Honorable Philip S. Gutierrez, who presided over the California Action, requesting a continuance of the default hearing. (Pl. Ex. 11). Rules 83-2.11. The letter was rejected as per Local (Pl. Ex. 11). On June 20, 2012, Judge Gutierrez granted Bonita's request for entry of default judgment, finding 5 that good cause sted for the entry of default against the defendant in the amount of $20 000 1 1 together with pre-judgment interest as well as attorneys' fees in the amount of $7 080.50 1 costs of suit in the amount of $682.50. 1 The California Court also issued a permanent injunction against Anand. On December 20 1 2012 1 Bonita entered an amended registration of foreign judgment against Anand in the amount of $271763 in the Southern District of New York. Anand subsequently filed the instant motions to dismiss and quash on March 25 1 2013 1 which was heard and marked fully submitted on April 16, 2013. II. Discussion Rule 12(b) (2) requires that a court dismiss a claim if the court does not have personal jurisdiction over the defendant. See Fed. R. Civ. P. 12(b) (2). personal jurisdiction , "To establish [a plaintiff] must show that [the defendant] has minimum contacts with the forum state and was properly served." Line Ltd" 2010) Salmassi e. Kfr. v. Euro-America No. 08-4892/ 2010 WL 2194827/ at *4 (S.D.N.Y. June 11 (citations omitted). Once a defendant has raised a jurisdictional defense on a Rule 12(b) motion to dismiss/ the 6 plaintiff bears the burden of establishing that the court has jurisdiction over a defendant. DiStefano v. Carozzi North America Inc., 286 F.3d 81, 84 (2d ~[J]urisdiction . 2001). must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998) omitted). (citations As such, a court may rely on evidence outside of the pleadings, including declarations submitted in support of the motion and the records attached to these declarations. See v. United States, 201 F.3d 110, 113 (2d Cir. 2000) resolving a motion to dismiss . a district court . refer to evidence outside of the pleadings. ") . ~[W]here (~In . may the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor[.]" A.I. Trade Finance, Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir. 1993). Under California Code of Civil Procedure § California courts may exercise personal jurisdiction 410.10, ~on any basis not inconsistent with the Constitution of this state or of the United States." the statute is to Cal. C. Civ. P. low the exercise 7 § 410.10. The effect of the broadest possible jurisdiction consistent with the due process clause of the United States Constitution. See Rocke v. Canadian Auto. Sport Club, 660 F.2d 395, 298 (9th Cir. 1981). "Personal jurisdiction may be either general or Inc. v. Seabest Foods specific." 4th 444, 445, 58 Cal. Rptr. 2d 899 1 Inc., 14 Cal. 926 P.2d 1085 (1996). "General jurisdiction exists when a defendant is domiciled in the forum state or his activities there are substantial, continuous, and systematic./I F. Hoffman-La Roche, Ltd. v. __~______ __ Co_u r~t, 130 Cal. App. 4th 782, 796 (2005). In the absence of general jurisdiction, a court may exercise specific jurisdiction over a nonresident defendant where "(1) the defendant has purposefully availed himself or herself of forum benefits;/I (2) the "controversy is related to or 'arises out of' [the] defendant's contacts with the forum"; and (3) "the assertion of personal jurisdiction would comport with 'fair play and substantial justice. lll Vons, 14 Cal. 4th at 447. The due process test for personal jurisdiction has two related components: the "minimum contacts and "reasonableness" inquiry.jllJetropolitan Life Ins. Co. v. _R~o~b~e~r~t~s~o~n~~~~~~~, 84 F.3d 560 1 567 (2d Cir.1996). To have minimum contacts, the defendant must purposefully avail himself 8 to the privileges and immunities of the forum state. Id. Under the minimum contacts test, an essential criterion in all cases lS whether the 'quality and nature' of the defendant!s activity lS such that it is 'reasonable' and 'fair' to require him to conduct his defense in that State." Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S. Ct. 1690, 56 L. Ed. 2d 132 (1978) (quotation omitted) . In addition, "[t]he mere fact that a corporation is subject to local jurisdiction does not neces ly mean its nonresident officers, directors, agents and employees are suable locally as well." Col~ Studio, Inc. v. Badpuppy Enterprise, 75 F. Supp. 2d 1104, 1111 (C.D. Cal. 1999). purposes, the acts of corporate offici "For jurisdictional ficers and directors in their capacities are the acts of the corporation exclusively and are thus not materi for purposes of establishing minimum contacts as to the individuals." Id. "Implicit in this principle is the consideration that corporations are separate legal entities that cannot act on their own but must do so through their appointed representatives." Id. Thus, "acts performed by these individuals, in their official capacities, cannot reasonably be attributed to them as individual acts creating personal j sdiction." Id. 9 Here, Plaintiff alleges that "Defendant's KAS products are sold in dozens stores in California, including Neiman Marcus, Bloomingdales, Fred Segal and Scoop. trade shows in California. California. Defendant attends Defendant had a sale representative Defendant travels to California on personal and/or business matters. Defendant infringed a copyright owned by a California based business." (Pl. Opp. at 9). Thus, each of Anand's purported contacts with California is based on Plaintiff's theory that Anand is acting as or controls KAS New York. Defendant has contended that "any goods sold that contained the allegedly infringing print . were sold by Dani II, not by 'Kas New York' and certainly not by 'Kirat Anand.' . Reply at 10). Defendant also has admitted that Dani II employed a sales representative and sold garments to various brick and mortar as well as online stores in California. (Id. ) . Defendant has claimed that "every single purported contact to California was by Dani II, not Kirat." Id. Plaintiff has submitted substantial evidence supporting its allegations that KAS NEW YORK placed the Design and Accused Garments in the stream of commerce with the purpose of garnering business in California. 10 (Pl. Exs. 1, 16, 17). However I a factual dispute exists as to the legal status of and Anand/s role in KAS NEW YORK of Dani II. I as well as the corporate structure Prior to a determination of jurisdiction as to what type control I specif l questions entity KAS NEW YORK exists as and under whose details as to the nature of Anand/s in KAS NEW YORK and Dani I I I and whether other shareholders or owners of Dani I I exist must be answered. Given the lack of such answers in the factual record l the exercise of jurisdiction is unclear at this time. District courts have "wide latitude to determine the scope of scovery and to allow jurisdictional discovery and l I II if so to what extent. Frontera Res. Azerbaijan Corp. v. State Oil Co. of the Azerbaijan Republic I 582 F.3d 393 1 401 (2d Cir. 2009) Jurisdictional discovery "should be granted where inent facts bearing on the question of jurisdiction are controverted s is . or where a more satisfactory showing of the necessary." 635 1 Kilpatr!ck v. Texas & Pac. Ry. CO' 638 (S.D.N.Y. 1947) 72 F. Supp. "May courts have considered such a showing necessary when between two corporations I with an unclear ll or entities. ationship Pension Committee of univ. of Montreal Pension Plan v. Banc of America Securi LLC 20 1 I No. 05 Civ. 9016(SAS) I 2006 WL 708470 1 at *6 (S.D.N.Y. Mar. 2006). 11 Accordingly, in light of Plaintiff's allegations and evidentiary submissions thus far, Plaintiff should be permitted to conduct jurisdictional discovery regarding Anand, KAS NEW YORK and Dani II's contacts with California limited to the issue of personal jurisdiction. The discovery shall be completed within 90 days. III. Conclusion Upon the facts and conclusions set forth above, the Defendant's motion to dismiss is denied without prejudice to renewal following jurisdictional discovery. It is so ordered. New York, NY April/'i ' 2013 12
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