Opinion
04-CV-0195E(Sc).
October 21, 2004
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
Plaintiffs A A Jewellers Limited and A A Jewelers, Inc. (collectively plaintiffs) commenced this action on March 25, 2004 against defendant Bogarz, Inc. seeking a judgment declaring that plaintiffs are not infringing any of defendant's copyright rights by selling the fourteen allegedly infringing jewelry products. Defendant subsequently filed an April 12, 2004 complaint in the United States District Court for the Central District of California ("the California action") against plaintiffs for copyright and trade dress infringement and unfair competition on those same fourteen allegedly infringing jewelry products. See Bogarz, Inc. v. A A Jewellers Ltd., Case No. 04-CV-2554-PA(CWx). Defendant then on April 16, 2004 filed in this Court a Motion to Dismiss Anticipatory Declaratory Judgment Action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("FRCvP") on the ground that plaintiffs filed "an anticipatory declaratory judgment action designed to deprive [defendant] of its right to litigate its affirmative action in a forum of its choosing". (Def.'s Mem. Supp. Mot. Dismiss at 5.) Plaintiffs moved for Preliminary Injunction ("PI") on April 20, 2004 seeking to enjoin defendant from prosecuting the California action. This Court's May 14, 2004 Order granted plaintiffs' PI, holding that defendant had not shown that plaintiffs had filed this action in order to win a "race to the courthouse" and the balance of conveniences weighed in favor of litigating this action in this forum. This Court will now address defendant's Motion to Dismiss and, for the reasons set forth below, defendant's Motion will be denied.
The California action is pending the ruling of this Motion, after which the parties shall file a joint report setting forth the status of the action in this Court. Bogarz, Inc. v. A A Jewellers Limited, Case No. 04-CV-2554-PA(CWx), Civil Minutes, May 25, 2004.
While familiarity with the facts is presumed, specific facts will be discussed as needed. Plaintiffs manufacture, market and distribute jewelry items. Defendant is a designer and manufacturer of jewelry. Defendant's counsel sent a letter on March 12, 2004 to plaintiffs alleging that they had infringed defendant's copyrights by manufacturing unauthorized reproductions of fourteen jewelry items and by selling them through Friedman's, Inc., a large retailer of jewelry. Defendant requested that plaintiffs immediately cease and desist selling the allegedly infringing jewelry and further stated that defendants will initiate legal action if plaintiffs fail to comply with such demands by March 18, 2004. Plaintiffs' counsel responded with a March 18 letter requesting that defendant provide plaintiffs with samples of the fourteen items at issue and their respective copyright certificates. Plaintiffs allege that they never received the requested samples and defendant claims said samples were sent. This Court's May 14, 2004 Order found that defendant did not put forth evidence to discredit plaintiffs' assertion that they never received the requested samples. May 14, 2004 Memorandum Order of this Court, at 6 n. 11. Following non-receipt of the requested samples and passage of defendant's deadline via the demand letter, plaintiffs commenced this action. Eighteen days later, defendant filed the California action, after which plaintiffs moved for and the Court granted PI enjoining defendant from prosecuting the California action. Before this Court is defendant's Motion to Dismiss this action pursuant to FRCvP 12(b)(6) on essentially the same grounds that this Court granted plaintiffs' PI. As such, on the same rationale as the Order granting PI, this Court must deny defendant's Motion.
A recitation of the facts and procedural history in this case is set out in the May 14, 2004 Memorandum and Order of this Court.
Defendant's Memorandum in support of this Motion does not cite a single case that is not also discussed in its Memorandum opposing plaintiffs' Motion for PI; furthermore, Defendant's Reply Memorandum in support of this Motion cites a few cases not cited in its previous Memoranda but does not provide a discussion of those cases that could alter the determination of this Court.
FRCvP 12(b)(6) entitles a defendant to a judgment of dismissal where a complaint fails to state a claim upon which relief can be granted. The standard of review on a motion to dismiss is heavily weighted in favor of a plaintiff. The Court is required to read a complaint generously, accepting the material facts alleged in the complaint as true and drawing all reasonable inferences from the complainant's allegations. California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 515 (1972); Frasier v. Gen. Elec. Co., 930 F.2d 1004, 1007 (2d Cir. 1991). A defendant is entitled to dismissal pursuant to FRCvP 12(b)(6) only when the Court finds that "it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
The Declaratory Judgment Act ("DJA") provides that a court " may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a) (2004) (emphasis added). The Supreme Court has held that the district court is "under no compulsion to exercise" the jurisdiction it has under the DJA. Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942). "The Court must look at the litigation situation as a whole in determining whether it is appropriate for the Court to exercise its jurisdiction over the declaratory judgment action before it." Great Am. Ins. Co. v. Houston Gen. Ins. Co., 735 F. Supp. 581, 585 (S.D.N.Y. 1990). Considering the litigation situation as a whole, in light of the Court's May 14, 2004 Order granting plaintiffs' PI and the principles of equity, the Court concludes that it should exercise its discretion to entertain plaintiffs' action for a declaratory judgment. Accordingly, defendant's Motion to Dismiss will be denied.
Defendant, in support of its Motion to Dismiss, argues that plaintiffs' misuse of the DJA to gain a procedural advantage and to forum shop warrants dismissal. Defendant, in opposition to plaintiffs' Motion for PI, argued that the "first-filed rule" did not apply in this case because plaintiffs' present action, merely designed to preemptively deprive defendant of its right to choose its own forum, constitutes a misuse of the DJA. In the May 14 Order, this Court held that plaintiffs filed this declaratory action to protect their rights and defendant had not shown that plaintiffs intentionally deceived defendant so that plaintiffs could file first in this district. May 14, 2004 Memorandum Order of this Court, at 7.
According to defendant, plaintiffs brought this action in anticipation of litigation resulting from the March 12 cease and desist letter, which explicitly stated that defendant's counsel had been instructed to initiate legal action if plaintiffs did not confirm in writing that they would comply with defendant's demands by March 18, 2004. Plaintiffs, however, did not comply with defendant's demands by the deadline and instead responded with a letter requesting samples, which defendant has not put forth evidence discrediting the assertions that such samples were never sent. This Court held that it is reasonable to believe that such circumstances caused plaintiffs uncertainty with regard to their rights in continuing to sell their jewelry and to the accrual of possible damages. May 14, 2004 Memorandum Order of this Court, at 6. This situation is what the DJA is intended to remedy by providing relief from uncertainty and clarifying and settling relevant legal issues. Luckenbach Steamship Co. v. United States, 312 F.2d 545, 548 (2d Cir. 1963) ("The purpose of the [DJA] is to avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage has accrued.") (quotation and citation omitted).
The facts indicate no such deception: (1) plaintiffs never asked for an extension of defendant's deadline, (2) plaintiffs did not prevent defendant from filing an action in another forum until they filed this action and sought PI, (3) defendant did not file the California action until eighteen days following the commencement of this action and (4) plaintiffs did not file this action until seven days after defendant's deadline had passed. May 14, 2004 Memorandum Order of this Court, at 8-9.
Further, defendant contends in favor of its Motion to Dismiss, just as it did in opposition to plaintiffs' Motion for PI, that significant factors militate in favor of dismissal of this case — viz, (1) Friedman is indispensable to the resolution of this action and this Court has no jurisdiction over Friedman while the California Court does, (2) most if not all of the documents and witnesses relevant to this action are located in California and (3) the principles of judicial economy and preservation of resources favor dismissal. This Court, however, in granting plaintiffs' PI, held against defendant on all three of those claims and found that the balance of conveniences and the interests of justice weigh in favor of the injunction and in favor of litigating in this forum.
In analyzing the balance of conveniences, courts consider the same factors as those used in considering a motion for change of venue — to wit, "(1) the convenience of witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of the operative facts; (5) the availability of process to compel attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances." Abovepeer, Inc. v. Recording Ind. Ass'n of Am., Inc., 166 F. Supp. 2d 655, 659 (N.D.N.Y. 2001) (citations omitted).
"[T]he balancing of conveniences is an equitable task and an `ample degree of discretion is afforded the district courts in determining suitable forum.'" 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 133 (S.D.N.Y. 1994) (citation omitted). Here, the balancing weighs in favor of this forum — viz, (1) the witnesses and documents relevant to the issue of plaintiffs' alleged copyright infringement and plaintiffs' principal place of business are within, or are proximate to, this District, (2) Friedman, who defendant claims should be party to this case, may not be subject to personal jurisdiction in California but declared that it would not object to this Court's exercise of personal jurisdiction over it, (3) the locus of operative facts, the relative means of the parties and the weight accorded plaintiffs' choice of forum all weigh in favor of this forum and (4) the interests of justice and trial efficiency militate in favor of this forum because this Court is already familiar with this case and changing venues would result in a waste of judicial resources. See May 14, 2004 Memorandum Order of this Court, at 10.
Therefore, there is nothing further for this Court to determine. Defendant's Motion to Dismiss makes the same arguments as were rejected in the Court's May 14, 2004 Order enjoining defendant from prosecuting the California action. As such, this Court holds this is the correct forum for this action and defendant's Motion to Dismiss plaintiffs' declaratory judgment action pursuant to FRCvP 12(b)(6) will be denied.
Accordingly, it is hereby ORDERED that defendant's Motion to Dismiss plaintiffs' declaratory judgment action is denied and that this action will continue in this forum.