Opinion
1:21-cv-06963 (GHW) (SDA)
07-18-2022
Sirius XM Radio Inc., Plaintiff, v. Aura Multimedia Corporation et al., Defendants.
HONORABLE GREGORY H. WOODS, UNITED STATES DISTRICT JUDGE:
REPORT AND RECOMMENDATION
STEWART D. AARON, UNITED STATES MAGISTRATE JUDGE.
Before the Court is a motion by pro se Defendant Clayton B. Burton, Jr. (“Burton”), pursuant to Rules 12(b)(2), (3) and (6), to dismiss the Complaint of Plaintiff Sirius XM Radio, Inc. (“Plaintiff” or “Sirius”), on the grounds of lack of personal jurisdiction, improper venue and failure to state a claim.(Burton 2/7/22 Mot., ECF No. 49.) For the reasons set forth below, it is respectfully recommended that Burton's motion to dismiss on the foregoing grounds be DENIED.
Burton previously had moved to dismiss the Complaint on multiple grounds, but the Court deferred ruling on the above grounds of Burton's motion pending the completion of jurisdictional discovery. See Sirius XM Radio v. Aura Multimedia Corp., No. 21-CV-06963 (GHW) (SDA), 2022 WL 1046767, at *8-9 (S.D.N.Y. Apr. 6, 2022), adopted by, 2022 WL 1266741 (S.D.N.Y. Apr. 28, 2022).
BACKGROUND
On August 18, 2021, Sirius filed its Complaint in this action. (See Compl., ECF No. 1.) In its Complaint, Sirius brings claims under the Lanham Act and New York law against Aura Multimedia Corp. (“Aura Multimedia Corp.”) and Aura Multimedia Tech (“Aura Multimedia Tech”) (together, the “Aura Defendants”) and Burton. (See id. ¶ 1.) Sirius alleges that, after a distribution agreement between Sirius and Aura Multimedia Corp. was terminated,Aura Multimedia Corp. improperly continued on its website to hold itself out as affiliated with Sirius and to use Sirius's trademarks. (See id. ¶¶ 20-22.) According to the Complaint, Aura Multimedia Tech was organized as a converted entity of Aura Multimedia Corp., and Burton was the registered agent and president of Aura Multimedia Corp. and the registered agent and manager of Aura Multimedia Tech. (See id. ¶¶ 8-9.)
The Complaint references and attaches two distribution agreements that had been entered into between Sirius and Aura Multimedia Corp. (which formerly was known as AMTC)-one in 2013 and one in 2016 (the “Distribution Agreements”). (See Compl. ¶¶ 7, 12-13, Exs. A & B.)
On February 7, 2022, Burton filed his motion to dismiss for lack of personal jurisdiction, improper venue and failure to state a claim, among other grounds. (See Burton 2/7/22 Mot.) On March 18, 2022, Sirius filed its opposition to Burton's motion to dismiss. (Pl.'s 3/18/22 Opp., ECF No. 56.) In an Opinion and Order and Report and Recommendation, dated April 6, 2022, the Court granted Sirius “leave to take limited jurisdictional discovery as to Burton's contacts with the State of New York, including his contacts while acting on behalf of the corporate defendants, and his conduct in New York relating to Plaintiff's claims.” Sirius XM Radio, 2022 WL 1046767, at *8.
On June 15, 2022, Sirius took Burton's deposition. (See Burton Dep. Tr., ECF No. 68-1.)On July 8, 2022, Sirius filed its supplemental opposition to Burton's motion to dismiss addressing personal jurisdiction issues. (Pl.'s 7/8/22 Supp. Opp., ECF No. 68.) On July 11, 2022, Burton filed a reply to Sirius's supplemental opposition. (Burton 7/11/22 Reply, ECF No. 69.)
On July 18, 2022, Burton filed a document regarding certain “issues” with his deposition transcript (ECF No. 71), none of which relates to my recommendations herein.
DISCUSSION
I. Personal Jurisdiction
A. Legal Standards
On a motion to dismiss for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2), “the plaintiff bears the burden of establishing that the court has jurisdiction over the defendant.” DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir. 2001). “[T]he showing a plaintiff must make to defeat a defendant's claim that the court lacks personal jurisdiction over it ‘varies depending on the procedural posture of the litigation.'” Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)). “Where . . . a district court in adjudicating a motion pursuant to Federal Rule of Civil Procedure 12(b)(2) ‘relies on the pleadings and affidavits, and chooses not to conduct a full-blown evidentiary hearing, plaintiffs need only make a prima facie showing of personal jurisdiction.'” S. New Eng. Tel. Co. v. Glob. NAPs Inc., 624 F.3d 123, 138 (2d Cir. 2010) (quoting Porina v. Marward Shipping Co., 521 F.3d 122, 126 (2d Cir. 2008)).
“Before jurisdictional discovery, a plaintiff's prima facie showing of jurisdiction ‘may be established solely by allegations.'” Astor Chocolate Corp. v. Elite Gold Ltd., 510 F.Supp.3d 108, 121 (S.D.N.Y. 2020) (quoting Ball, 902 F.2d at 197). “However, where jurisdictional discovery has been conducted-as here-a plaintiff's prima facie showing must be ‘factually supported'; in other words, it must ‘include an averment of facts that, if credited by [the ultimate trier of fact], would suffice to establish jurisdiction over the defendant.'” Id. (quoting Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir. 1996)).
A court may exercise either general or specific personal jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 127 (2014). To make out a prima facie case of personal jurisdiction, whether based on general or specific personal jurisdiction, a plaintiff must establish both a “statutory basis” for jurisdiction and that the exercise of such jurisdiction accords “with constitutional due process principles.” Cortlandt St. Recovery Corp. v. Deutsche Bank AG, No. 14-CV-01568 (JPO), 2015 WL 5091170, at *2 (S.D.N.Y. Aug. 28, 2015) (quoting Reich v. Lopez, 38 F.Supp.3d 436, 454 (S.D.N.Y. 2014)). Specific personal jurisdiction subjects a defendant to suit only on claims that arise from the defendant's conduct in the forum. See Cortlandt St. Recovery Corp., 2015 WL 5091170, at *2; see also Daimler, 571 U.S. at 126-27.
New York's specific (long-arm) jurisdiction statute states that “a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent”:
1. transacts any business within the state or contracts anywhere to supply goods or services in the state; or
2. commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; or
3. commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; or
4. owns, uses or possesses any real property situated within the state.N.Y. C.P.L.R. § 302(a).
“To determine the existence of jurisdiction under section 302(a)(1), a court must decide (1) whether the defendant transacts any business in New York and, if so, (2) whether this cause of action arises from such a business transaction.” Best Van Lines, Inc. v. Walker, 490 F.3d 239, 246 (2d Cir. 2007) (internal quotation marks omitted). Section 302(a)(1) is a “single act statute,” which means that “proof of one transaction in New York is sufficient to invoke jurisdiction.” Deutsche Bank Sec., Inc. v. Mont. Bd. of Invs., 7 N.Y.3d 65, 71 (2006) (internal quotation marks and citation omitted). The primary consideration is not the quantity but the quality of the contacts with New York. See Fischbarg v. Doucet, 9 N.Y.3d 375, 380 (2007). Accordingly, “the purposeful creation of a continuing relationship with a New York corporation” supports the exercise of personal jurisdiction. Id. at 381 (citations omitted).
CPLR § 302 does not distinguish actions taken in a defendant's personal capacity from actions taken in his “corporate” capacity. See Chloe v. Queen Bee of Beverly Hills, 616 F.3d 158, 164 (2d Cir. 2010) (CPLR § 302 “confers jurisdiction over individual corporate officers who supervise and control an infringing activity”); see also Retail Software Servs. Inc. v. Lashlee, 854 F.2d 18, 22 (2d Cir. 1988) (upholding long-arm jurisdiction over corporate employee who was “primary actor” in transaction in New York that was source of litigation (citing Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 470 (1988)). Where a Chief Executive Officer (“CEO”) exercises extensive control over the day-to-day activities of a corporation, it is “appropriate” for the court to “consider the scope of [the corporation's] activities in New York in evaluating whether it [can] exercise personal jurisdiction over [the CEO].” EMI Christian Music Grp., Inc. v. MP3tunes, LLC, 844 F.3d 79, 98 (2d Cir. 2016).
Once a prima facie showing of a statutory basis for jurisdiction has been made, the plaintiff must “demonstrate that the exercise of personal jurisdiction comports with due process.” Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 81-82 (2d Cir. 2018); see also Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Two separate components are considered under the Due Process Clause analysis: the “minimum contacts” inquiry and the “reasonableness” inquiry. See Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50, 60 (2d Cir. 2012) (citing Chloe, 616 F.3d at 164). The “minimum contacts” inquiry examines “whether the defendant has sufficient contacts with the forum state to justify the court's exercise of personal jurisdiction.” Id. The Court considers these contacts in totality, with the crucial question being whether the defendant has purposefully availed himself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws such that the defendant should reasonably anticipate being haled into court there. See Best Van Lines, Inc., 490 F.3d at 242-43. The “reasonableness” inquiry examines “whether the assertion of personal jurisdiction comports with ‘traditional notions of fair play and substantial justice'-that is, whether it is reasonable to exercise personal jurisdiction under the circumstances of the particular case.” Chloe, 616 F.3d at 164 (quoting Int'l Shoe, 326 U.S. at 316).
B. Analysis
The Court carefully has reviewed the parties' submissions, including the transcript of deposition of Burton, and finds that Sirius has met its burden of averring facts that, if credited, would suffice to establish jurisdiction over Burton. See Astor Chocolate Corp., 510 F.Supp.3d at 121. As discussed below, Sirius has shown that Burton, through his activities on behalf of Aura Multimedia Corp., had sufficient contacts with the State of New York.
Plaintiff bases personal jurisdiction over Burton on § 302(a)(1) of New York's long-arm statute. (See Pl.'s 3/18/22 Opp. at 7-10.) With respect to the first element, i.e., whether the Burton transacted any business in New York, see Best Van Lines, Inc., 490 F.3d at 246, although Burton contends that he never personally transacted business in New York, he admits that he managed the day-to-day operations of the corporate defendants for a substantial period of time. (See Burton 2/7/22 Mot., Ex. A ¶¶ 10, 16; Burton Dep. Tr. at 9.)
Burton argues that he never personally entered into an agreement with Sirius and that he personally never transacted business in New York, and thus that there is no basis for jurisdiction over him in New York. (See Burton 2/7/22 Mot., Ex. A ¶¶ 9-10, 15.) This is tantamount to arguing in favor of the so-called fiduciary shield doctrine. Under that doctrine, “if an individual ha[d] contact with a particular state only by virtue of his acts as a fiduciary of the corporation, he may be shielded from the exercise, by that state, of jurisdiction over him personally on the basis of that conduct.” See Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 902 (2d Cir. 1981). However, the fiduciary shield doctrine has been explicitly rejected both by the New York Court of Appeals and the Second Circuit for purposes of CPLR § 302. See Kreutter, 71 N.Y.2d at 470 (“Turning then to the interpretation of CPLR § 302, we determine that it is neither necessary nor desirable to adopt the fiduciary shield doctrine in New York.”); Retail Software Servs., Inc. v. Lashlee, 854 F.2d 18, 22 (2d Cir. 1988) (finding corporate officer acting in corporate capacity subject to New York's personal jurisdiction under Kreutter).
The record before the Court as to when Burton ceased to be involved in the day-to-day operations of the corporate defendants is inconsistent. Burton's February 7, 2022 Declaration states that he “ha[d] not managed the day-to-day operations of any of the corporate entities . . . since early 2020.” (See Burton 2/7/22 Mot., Ex. A ¶ 16.) However, during his deposition, Burton testified that he ceased being involved in “day-to-day operations” in or around 2018. (See Burton Dep. Tr. at 9; see also id. at 33 (“between 2018 and 2019, I had pretty much phased out completely”).)
Aura Multimedia Corp. was a party to the 2013 and 2016 Distribution Agreements that were entered into with Sirius, a corporation that has a principal place of business in New York.(See 2013 Distribution Agreement, ECF No. 1-1; 2016 Distribution Agreement, ECF No. 1-2; Compl. ¶ 6.) These Agreements list a New York address for Sirius, contain New York choice of law provisions and contain consents to the jurisdiction of federal courts in New York City. (See 2013 Distribution Agreement at 13-14; 2016 Distribution Agreement at 14.) However, in order to determine whether the actions of Aura Multimedia Corp. are attributable to Burton and support New York's assertion of jurisdiction over him, Sirius must “convince the court that [Aura Multimedia Corp.] engaged in purposeful activities in this State in relation to [the] transaction for the benefit of and with the knowledge and consent of the [Burton] and that [he] exercised some control over [Aura Multimedia Corp.] in the matter.” See Kreutter, 71 N.Y.2d at 467.
There also had been earlier versions of distribution agreements between the parties, dating back as early as 2003. (See Burton Dep. Tr. at 39, 45.)
Here, Aura Multimedia Corp. engaged in purposeful activities in New York by being a party to various agreements with New York-based Sirius which contained New York choice of law and choice of forum clauses. (See Compl. Exs. A & B.) Burton had knowledge of and consented to the activities since he signed the agreements on behalf of Aura Multimedia Corp. (See id.) He benefited from the activities since he was the sole owner of Aura Multimedia Corp. (See Burton Dep. Tr. at 16.) In addition, Burton exercised some control over Aura Multimedia Corp. For a time, Burton was the “point person” for Aura Multimedia Corp.'s relationship with Sirius and, except for customer service and technical issues, Sirius did not communicate with anyone at Aura Multimedia Corp. other than Burton (and, from time to time, Greg Powell, who was in charge of sales). (See Burton Dep. Tr. at 42-43.) Even after the day-to-day responsibilities were transferred to an individual named Manish Sayre, Burton still was President of Aura Multimedia Corp. and was responsible for paying Sayre. (See id. at 21, 29-30, 35.) Moreover, Sayre would contact Burton if “significant” issues arose. (See id. at 29.)
Aura Multimedia Corp. never had any officers or directors other than Burton. (See Burton Dep. Tr. at 26.)
Based upon the record before the Court, there are sufficient averments of fact to establish long-arm personal jurisdiction over Burton based upon his conduct on behalf of Aura Multimedia Corp. See Sea Tow Servs. Int'l, Inc. v. Pontin, 472 F.Supp.2d 349, 361 (E.D.N.Y. 2007) (Bianco, J.) (personal jurisdiction found under CPLR 302(a)(1) where “the individual defendant, ‘operated and/or managed' the corporate defendants, negotiated, signed, and, renewed the Agreement [at issue] on behalf of the corporate defendants”); see also EMI Christian Music Grp., Inc., 844 F.3d at 98 (affirming district court's imputation of contacts of corporation to individual defendant who was founder and CEO and had “extensive control over . . . day-to-day activities”).
With respect to the second prong, see Best Van Lines, Inc., 490 F.3d at 246, the Court finds that Plaintiff's causes of action arose out of Burton's transaction of business in New York. Burton argues that personal jurisdiction over him does not exist because the alleged infringement occurred three years after his “involvement with AMTC had substantially ceased.” (See Burton 7/11/22 Reply ¶ 8.) However, the issue is not the timing of the infringement, but rather whether the infringement arose out of the transaction of business in New York, i.e., here, the distribution agreements executed with Sirius. The claims alleged in the Complaint against Burton did arise out of the breach by Aura Multimedia Corp. of the 2016 Distribution Agreement, inasmuch as the Lanham Act and other statutory violations occurred because Aura Multimedia Corp., after termination of the Agreement, no longer had the right to use the Sirius marks.
This case is analogous to Sunward Elecs., Inc. v. McDonald, 362 F.3d 17 (2d Cir. 2004). In Sunward, the plaintiff company, which was based in New York and which manufactured and distributed pet fencing systems using certain trademarks, entered into a dealership agreement with defendants, an Alabama company and Alabama citizens, which authorized defendants to use plaintiff's trademarks. See id. at 21. The agreement, which contained a New York choice of law clause, provided that defendants no longer could use plaintiff's trademarks after the agreement was terminated. See id. at 21, 23. Following termination of the agreement, defendants continued to use plaintiff's trademarks, and plaintiff brought claims against defendants under the Lanham Act, among other claims. See id. at 21-23.
The defendants in Sunward argued that personal jurisdiction did not exist over them, but the district court found that personal jurisdiction did exist in the Northern District of New York. See Sunward Elecs. Inc. v. McDonald, No. 03-CV-00345 (LEK) (RFT), 2003 WL 25719935, at *3 (N.D.N.Y. Apr. 24, 2003). On appeal to the Second Circuit, the “[d]efendants contend[ed] that [p]laintiff's cause of action does not ‘arise' from New York transactions because the alleged trademark infringement occurred in Alabama, and only after their contract with Plaintiff expired.” Sunward, 362 F.3d at 23. The Second Circuit found the defendants' argument to be without merit, finding that the plaintiff's Lanham Act claim arose out of the defendants' New York business transactions. See id. The Second Circuit held: “Plaintiff's Lanham Act claim sounds in tort.... Although Section 302(a)(1) is typically invoked in breach of contract cases, . . . ‘it applies as well to actions in tort when supported by a sufficient showing of facts.'” Id. at 24 (citations omitted). Here, similar to the facts in Sunward, Sirius's Lanham Act claims arose out of Burton's transaction of business in New York-i.e., entering into and operating under Distributor Agreements with Sirius that contained New York choice of law and choice of forum clauses.
The exercise of personal jurisdiction over Burton is consistent with the Constitution's due process requirements, since Burton had sufficient contacts with the State of New York, and it is reasonable to exercise jurisdiction over him in New York. Again, Burton intimately was involved with the Distribution Agreements and their performance. He even visited Sirius's studios in New York. Moreover, he signed the Agreements, both of which contained a New York choice of law clause and a consent to the jurisdiction of federal courts in New York.
II. Venue
A. Legal Standards
“When a motion to dismiss for improper venue is made pursuant to Rule 12(b)(3), the plaintiff has the burden of pleading venue.” Philippe NYC I LLC v. Philippe West Coast, LLC, No. 14-CV-09858 (NRB), 2016 WL 1183669, at *6 (S.D.N.Y. Mar. 24, 2016) (citing Person v. Google Inc., 456 F.Supp.2d 488, 493 (S.D.N.Y. 2006)). “To defeat the motion, plaintiffs need only make a prima facie showing of venue.” Id. (citations omitted). “In analyzing whether the plaintiff has made the requisite prima facie showing that venue is proper, we view all facts in a light most favorable to plaintiff.” Phillips v. Audio Active Ltd., 494 F.3d 378, 384 (2d Cir. 2007).
Under the general federal venue statute, “[a] civil action may be brought in . . . a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred.” 28 U.S.C. § 1391(a)(2). “Courts conduct a two-part inquiry to determine whether venue is appropriate under Section 1391(b)(2).” Sea Tow Servs. Int'l, Inc., 472 F.Supp.2d at 363. “First, the Court must ‘identify the nature of the claims and the acts or omissions that the plaintiff alleges give rise to those claims.'” Id. (quoting Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 432 (2d Cir. 2005)). Second, the Court determines whether a substantial part of those acts or omissions occurred in the district where suit was filed, that is, whether significant events or omissions material to those claims occurred in the district in question. See id. With regard to the second part of the inquiry, “‘[s]ubstantiality' for venue purposes is more a qualitative than a quantitative inquiry.” See id. (quoting Daniel, 428 F.3d at 432-33). Finally, “venue is appropriate in ‘each district where a substantial part of the events . . . occurred,' and thus venue may be appropriate in this district even if a greater portion of events occurred elsewhere.” Id. (quoting Concesionaria DHM, S.A. v. Int'l Finance Corp., 307 F.Supp.2d 553, 559 (S.D.N.Y. 2004)) (emphasis in original).
Prior to its amendment in 1990, the “statute allowed venue in ‘the judicial district . . . in which the claim arose.” 17 Moore's Federal Practice § 110.04[1] (3d ed. 2022). Following the amendment, which allows venue in “a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred,” 28 U.S.C. § 1391(b)(2), “courts generally are appropriately interpreting the amended provision broadly as intended by Congress.” See 17 Moore's Federal Practice § 110.04[2].
B. Analysis
Viewing the facts in the light most favorable to Plaintiff, the Court finds that Plaintiff has made a prima facie showing of venue in this district for its claims against Burton. First, as to the nature of the claims, Plaintiff alleges that, at one time, Defendants had license to use Sirius trademarks but, subsequent to Plaintiff's termination of the 2016 Distribution Agreement, Defendants impermissibly continued to use Plaintiff's trademarks. The acts giving rise to those claims include, among others, the formation of the 2016 Distribution Agreement with New Yorkbased Sirius containing New York choice of law and New York choice of forum provisions; the issuance by Sirius of the notice of termination sent to the attention of Burton from Sirius's New York headquarters (see 8/6/20 Not. of Term., ECF No. 46-5); and the issuance by Sirius of a cease-and-desist letter to the attention of Burton from Sirius's New York headquarters requesting that Defendants discontinue use of Sirius's trademarks. (See 4/6/21 Ltr., ECF No. 46-8.)
Second, as to substantiality, the Court finds that the events described above occurred in the Southern District of New York and comprise a substantial part of the events giving rise to the claims asserted here against Burton, thus making venue proper in this district. See Sea Tow Servs. Int'l, Inc., 472 F.Supp.2d at 365-66 (finding venue proper in Eastern District of New York where acts giving rise to trademark claims included issuance of notice from New York of termination of license and receipt by licensees of correspondence from New York regarding termination of agreement and requesting that licensees cease to use marks and trade dress). In addition, this district is where Plaintiff had its principal place of business, and suffered harm as a result of Burton's actions and inactions. See Google LLC v. Starovikov, No. 21-CV-10260 (DLC), 2021 WL 6754263, at *1 (S.D.N.Y. Dec. 16, 2021) (finding venue proper under 28 U.S.C. § 1391(b), in part, “because a substantial part of the harm caused by Defendants has occurred in this judicial district”).
III. Rule 12(b)(6)
A. Legal Standards For Failure To State A Claim Motion
To survive a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. The Court “must accept as true all of the allegations contained in a complaint,” but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted).
B. Legal Standards for Lanham Act And New York Law Claims
1. Trademark Counterfeiting Under Section 1114 of the Lanham Act
To prove trademark counterfeiting under the Lanham Act, a plaintiff must show it owns a valid, protectable trademark, see Innovation Ventures, LLC v. Ultimate One Distrib. Corp., 176 F.Supp.3d 137, 153 (E.D.N.Y. 2016), the defendant used in commerce, without consent, a counterfeit of the trademark “in connection with the sale, offering for sale, distribution, or advertising of any goods or services” and “such use is likely to cause confusion, or to cause mistake, or to deceive.” See 15 U.S.C. § 1114(1)(a); see also 15 U.S.C. § 1127 (defining “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark”). “Consumer confusion is ‘analyzed with reference to the eight factors first articulated in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961).'” Spin Master Ltd. v. Alan Yuan's Store, 325 F.Supp.3d 413, 421 (S.D.N.Y. 2018) (citation omitted). However, “courts in this District generally agree that ‘where counterfeit marks are involved, it is not necessary to perform the step-by-step examination of each Polaroid factor because counterfeit marks are inherently confusing.'” Id. (citation omitted).
The eight Polaroid factors are as follows: “(1) strength of the trademark; (2) similarity of the marks; (3) proximity of the products and their competitiveness with one another; (4) evidence that the senior user may ‘bridge the gap' by developing a product for sale in the market of the alleged infringer's product; (5) evidence of actual consumer confusion; (6) evidence that the imitative mark was adopted in bad faith; (7) respective quality of the products; and (8) sophistication of consumers in the relevant market.” Int'l Info. Sys. Sec. Certification Consortium, Inc. v. Sec. Univ., LLC, 823 F.3d 153, 160 (2d Cir. 2016) (citation omitted).
2. Trademark Infringement Under Section 1114 of the Lanham Act
“To succeed in establishing liability for infringement under the Lanham Act, a plaintiff must prove: (1) that it owns a valid, protectible trademark; (2) that the defendant used the trademark in commerce and without consent; and (3) that there was a likelihood of consumer confusion.” C=Holdings B.V. v. Asiarim Corp., 992 F.Supp.2d 223, 239 (S.D.N.Y. 2013) (citing 1800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 406 (2d Cir. 2005); 15 U.S.C. § 1114(1)).
3. False Association Under Section 1124 of the Lanham Act
The elements of a claim for false association are the same as those for trademark infringement, discussed above. “To prevail on a claim of trademark infringement or false association, ‘a plaintiff must show, first, that its mark merits protection, and, second, that the defendant's use of a similar mark is likely to cause consumer confusion.'” Chanel, Inc. v. WGACA, LLC, No. 18-CV-02253 (LLS), 2022 WL 902931, at *5 (S.D.N.Y. Mar. 28, 2022) (footnote omitted) (citing Int'l Info. Sys. Sec. Certification Consortium, Inc., 823 F.3d at 160).
4. False Advertising Under Section 1125 of the Lanham Act
To establish a false advertising claim under Section 43(a) of the Lanham Act, a plaintiff must prove five elements: “1) the defendant has made a false or misleading statement; 2) the false or misleading statement has actually deceived or has the capacity to deceive a substantial portion of the intended audience; 3) the deception is material in that it is likely to influence purchasing decisions; 4) there is a likelihood of injury to [the] plaintiff, such as declining sales or loss of goodwill; and 5) the goods traveled in interstate commerce.” Johnson & Johnson Vision Care, Inc. v. CIBA Vision Corp., 348 F.Supp.2d 165, 177-78 (S.D.N.Y. 2004).
5. Trademark Dilution Under Section 1125 of the Lanham Act (and N.Y. Gen. Bus. Law § 360-1)
“The owner of a famous mark can succeed on a claim of trademark dilution under federal law against an individual or entity who ‘commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.'” Knowles-Carter v. Feyonce, Inc., 347 F.Supp.3d 217, 227-28 (S.D.N.Y. 2018) (citing 15 U.S.C. § 1125(c)(1)). “To prevail on a claim for trademark dilution under New York General Business Law § 360-1, a plaintiff must prove (1) that the trademark is truly distinctive or has acquired secondary meaning, and (2) a likelihood of dilution either as a result of blurring or tarnishment.” Id. (citations and internal quotation marks omitted).
6. Unfair and Deceptive Trade Practices Under N.Y. Gen. Bus. Law § 349
To state a claim pursuant to GBL § 349, “a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result as a result of the allegedly deceptive act or practice.” Nick's Garage, Inc. v. Progressive Case. Ins. Co., 875 F.3d 107, 124 (2d Cir. 2017) (citation omitted).
7. Unfair Competition Claims
“The elements necessary to prevail on causes of action for trademark infringement and unfair competition under New York common law mirror the Lanham Act claims.” ESPN, Inc. v. Quiksilver, Inc., 586 F.Supp.2d 219, 230 (S.D.N.Y. 2008). "[T]o state a claim for New York common law unfair competition, the party making the claim must demonstrate that (1) it possesses a valid, protectible mark; and (2) that the result of the defendant's alleged use is a likelihood of confusion between the marks of the alleged infringer and the charging party.” Id. (internal citations and quotations omitted). New York unfair competition law also includes “some element of bad faith.” Id. (citations omitted).
C. Analysis
This Court previously found that Plaintiff has stated Lanham Act and New York law claims against the Aura Defendants. See Sirius XM Radio Inc. v. Aura Multimedia Corp. No. 21-CV-06963 (GHW) (SDA), 2022 U.S. Dist. LEXIS 67806, *7-14 (S.D.N.Y. Apr. 12, 2022). As noted in my prior Report and Recommendation, Sirius owned and controlled distinctive, legally protectable, registered trademarks; without consent, the Aura Defendants used a counterfeit of Sirius's marks in connection with the sale and advertising of goods or services; and the Aura Defendants use of the Sirius marks was inherently confusing, and done in bad faith. See id. The Court now finds that Plaintiff plausibly has alleged its Lanham Act claims against Burton.
Plaintiff asserts that Burton should be held personally liable for the Lanham Act violations since, as an officer of the corporate defendants, he was a “moving, active, conscious, force” behind the defendant corporation's violations. (See Pl.'s 3/18/22 Opp. at 15-16.) The alleged violations arose from the continued use of Sirius trademarks on the Aura Multimedia Corp. website after the 2016 Distribution Agreement was terminated. (See Compl. ¶¶ 21-22.) Case law supports the plausibility of Plaintiff's Lanham Act claims against Burton. “It is well established in the Second Circuit that under the Lanham Act, a corporate officer may be held personally liable for trademark infringement and unfair competition if the officer is a moving, active, conscious, force behind [the defendant corporation's] infringement.” Chloe v. Queen Bee of Beverly Hills, LLC, No. 06-CV-03140 (RJH), 2011 WL 3678802, at *4 (S.D.N.Y. Aug. 19, 2011) (internal citation omitted) (collecting cases).
In the present case, as set forth above, Burton at all times was the owner and sole officer and director of Aura Multimedia Corp. He signed the 2016 Distributor Agreement that required Aura Multimedia Corp. to discontinue the use of Sirius's trademarks upon termination of the Agreement. (See Compl. Ex. B at 9.) On September 6, 2020, the 2016 Distribution Agreement was terminated. (See Compl. ¶ 17.) After termination, and at least until August 2021, Sirius's trademarks continued to appear on the Aura Multimedia Corp. website. (See id. ¶ 26.) In these circumstances, the Court finds that Plaintiff plausibly has alleged that Burton was the moving, active, conscious, force behind the infringement at issue in this action.
During his deposition, Burton asserted that the Sirius trademarks remained on the company website because “nobody was paying any attention to it.” (See Burton Dep. Tr. at 67.) On a motion to dismiss, it is not the function of the Court to assess credibility or weigh the evidence. Rather, the Court merely finds that plausible allegations of liability have been pled against Burton to survive a motion to dismiss.
In addition, given Burton's role in the Aura Defendants' actions, Plaintiff plausibly has alleged claims against Burton under the New York General Business Law. See Mayfield v. Asta Funding, Inc., 95 F.Supp.3d 685, 701 (S.D.N.Y. 2015) (declining to dismiss GBL claims because plaintiffs “sufficiently pleaded the individual defendants' personal participation in deceptive business practices prohibited by the GBL”).
Finally, given that claims for unfair competition under New York common law mirror the Lanham Act claims, see Quiksilver, Inc., 586 F.Supp.2d at 230, Plaintiff plausibly has alleged an unfair competition claim against Burton under New York law.
CONCLUSION
For the foregoing reasons, it is respectfully recommended that Burton's motion to dismiss for lack of personal jurisdiction, improper venue and failure to state a claim be DENIED.
SO ORDERED.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS
The parties shall have fourteen (14) days (including weekends and holidays) from service to file written objections, pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Woods.
THE FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).