attorneys' fees and costs associated with this application.
If any of these conditions has not been met within the stated
thirty day period, Mr. Versace shall pay to Gianni a fine of
$1,000 each day thereafter until it fully complies with this
Order. See Playboy, 939 F. Supp. at 1041. In addition, Gianni
may seek any further sanctions if it feels it has not been
adequately compensated for any losses it actually sustained.
II. Motion for Leave to Amend
For reasons apparently unrelated to its motion for contempt
sanctions, Gianni moves the Court for leave to amend its answer,
counterclaim, and third-party complaint in the A.V. Action, so
as to assert third-party claims against TSI and TSIE. Gianni
asserts that it has learned through discovery that TSI and TSIE
were active participants in the alleged infringement. See
Jacoby Aff. ¶ 2. In particular, according to counsel for Gianni,
TSI and TSIE are entities controlled by third-party defendant
Pelligrino. See id. ¶¶ 4-6; Jacoby Rep. Aff. ¶ 7. Consequently,
A.V. shared a close relationship with TSI, such that TSI
employees allegedly (1) incorporated A.V., see Jacoby Aff. ¶ 8;
and (2) installed A.V.'s computer systems, see id. ¶¶ 12-13;
(3) signed A.V.'s quarterly federal tax withholding forms and
insurance claims, see id. ¶ 14; and (4) acted as A.V.'s general
counsel, see id. ¶¶ 15-16; and (5) authorized payments from TSI
on A.V.'s loans. Furthermore, Gianni contends that TSI itself (6)
bought and financed the manufacture of "Alfredo Versace" shoes in
Korea, see id. ¶¶ 9, 20-21 & Exhs. Q-R, Jacoby Rep. Aff. ¶ 8;
(7) handled A.V.'s shipping, see Jacoby Aff. ¶ 11; (8) paid
A.V.'s bills, see id. ¶ 11; and (9) along with TSIE, played a
"vital role" in financing A.V.'s operations by securing more than
$500,000 in A.V.'s debt, see id. ¶¶ 18-19, 22 & Exhs. P-S. As
it is doubtful that A.V. has retained assets sufficient to
satisfy a judgment against it, Gianni seeks to add TSI and TSIE
as third-party defendants, to the extent either hold assets used
to facilitate infringement by A.V. See id. ¶ 25.
A.V., the plaintiff and counterclaim-defendant, opposes the
motion, as do third-party defendants Pelligrino and Marano
(collectively, the "motion opponents"). They maintain that TSI
and TSIE had no role in A.V.'s operations or financing — as A.V.
had its own independent and proper corporate structure — and thus
any responsibility on their part for alleged infringing
activities was at most tangential. See A.V. Opp. Mem. at 1,
5-6; Third-Party Defendants' Opp. Mem. ("TPD Opp. Mem.") at 4,
8-9, 11-12; Buoniconti Aff. ¶¶ 19, 23, 25; Walsh Aff. ¶¶ 2-3,
5-15, 17-20, 22 & Exhs. A-P. Rather, according to the motion
opponents, TSI and TSIE merely served as guarantors, not
purchasers of merchandise. See Walsh Aff. ¶¶ 17-20, 24.
Furthermore, the motion opponents charge that Gianni is
effectively attempting to pierce A.V.'s corporate veil in order
to reach completely separate business entities, and thereby
interjecting a new legal theory that will require additional
pleading and discovery, to the prejudice of A.V. and the
third-party defendants. See A.V. Opp. Mem. at 5, 6; TPD Opp.
Mem. at 12-13; Buoniconti Aff. ¶ 26. Finally, they also protest
that the introduction of additional third-party defendants at
this stage of the litigation will unduly prolong the A.V.
Action and unnecessarily extend discovery. See A.V. Opp. Mem.
at 4; TPD Opp. Mem. at 13; Buoniconti Aff. ¶¶ 3, 5, 14, 17; Walsh
Aff. ¶ 21.
A. Standard for Granting Leave to Amend
Federal Rule of Civil Procedure 15(a) permits a party to amend
a pleading "by leave of the court." The Rule provides that leave
to amend "shall be freely given when justice so requires." Id.
"Nonetheless, a motion to amend may be denied due to undue delay
or if it would cause undue prejudice to the opposing party."
Ashjari v. NYNEX Corp., 82 F.3d 898, 1999 WL 464977, at *1 (2nd
22, 1999). In addition, the Court has discretion to deny leave to
amend where the proposed amendment would be futile. See Marchi
v. Board of Coop. Educ. Servs., 173 F.3d 469, 477 (2d Cir.
1999); see also Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct.
227, 9 L.Ed.2d 222 (1962) ("In the absence of any apparent or
declared reason — such as undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment,
futility of amendment, etc. — the leave sought should, as the
rules require, be `freely given.'").
Although there is a general presumption in favor of permitting
amendment, this Court has broad discretion in deciding whether to
allow Gianni to amend its pleadings. Leave to amend may be denied
where it appears that the proposed amendments are "unlikely to be
productive." Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131
(2d Cir. 1993); see also Kaster v. Modification Sys., Inc.,
731 F.2d 1014, 1018 (2d Cir. 1984) ("That the amendments would not
serve any purpose is a valid ground to deny a motion for leave to
amend."). Thus, if the proposed amended complaint would be
subject to "immediate dismissal" for failure to state a claim or
on some other ground, the Court will not permit the amendment.
Jones v. New York State Div. of Military & Naval Affairs,
166 F.3d 45, 55 (2d Cir. 1999). By contrast, "`if [Gianni] has at
least colorable grounds for relief, justice does so require'"
that its motion be granted. Ryder Energy Distrib. Corp. v.
Merrill Lynch Commodities Inc., 748 F.2d 774, 783 (2d Cir. 1984)
(quoting S.S. Silberblatt, Inc. v. East Harlem Pilot Block-Bldg.
1 Housing Dev. Fund Co., 608 F.2d 28, 41 (2d Cir. 1979)).
The motion opponents have endeavored to explain the somewhat
suspicious relationship between TSI, TSIE, and A.V. They have
not, however, demonstrated Gianni's inability to state a claim
for relief against TSI and TSIE. The motion opponents maintain
that Gianni's amended third-party complaint does not allege that
either TSI or TSIE ever "engaged in the manufacturing, marketing
or sale of the allegedly infringing items." Opp. Mem. at 6.
Furthermore, they argue that Gianni cannot establish that it lost
sales as a result of the alleged infringement.
While Gianni may not yet be able to show the existence of
triable issues of material fact, the standard for granting leave
to amend is far more liberal than the showing required to survive
summary judgment. Gianni has pleaded its claims with substantial
specificity and has adduced several facts suggesting that TSI and
TSIE did play a significant role in A.V.'s operations. The owner
of a trademark "is entitled to protection against all who
knowingly play a significant role in accomplishing the unlawful
purpose." Stix Prods. Inc. v. United Merchants & Mfrs., Inc.,
295 F. Supp. 479, 500 (S.D.N.Y. 1968) (Weinfeld, J.) (citing
Cuervo v. Jacob Henkell Co., 50 F. 471, 472 (C.C.S.D.N.Y. 1892)
("Complainant is clearly entitled to an injunction against all
who knowingly combine together to accomplish that
purpose.")).*fn24 It certainly "lies within the realm of
possibility" that, upon further
discovery, Gianni might be able to prove that TSI and TSIE
knowingly played an indispensable role in A.V.'s infringing
activities. Pangburn v. Culbertson, 200 F.3d 65, 71 (2d Cir.
1999). Moreover, as the parties vigorously dispute the legitimacy
of A.V.'s corporate formalities, the Court cannot at this point
say that Gianni will be unable to demonstrate an adequate basis
for disregarding A.V.'s corporate structure and "piercing the
As such, the amendments have not been shown to be futile. Any
deficiencies in the pleadings can best be considered in the
context of a motion for summary judgment. See WIXT Television,
Inc. v. Meredith Corp., 506 F. Supp. 1003, 1010 (S.D.N Y
C. Undue Prejudice
The motion opponents also contend that allowing the amendments
will prejudice their case. However, prejudice alone is
insufficient to justify a denial of leave to amend; rather, the
necessary showing is "undue prejudice to the opposing party."
Foman, 371 U.S. at 182, 83 S.Ct. 227 (emphasis added); see
also MacDraw, Inc. v. CIT Group Equip. Financing, Inc.,
157 F.3d 956, 962 (2d Cir. 1998). "`Mere delay, . . . absent a showing of
bad faith or undue prejudice, does not provide a basis for a
district court to deny the right to amend.'" Block v. First
Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993) (quoting State
Teachers Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d
Cir. 1981)). In determining whether a party's interests have been
unduly prejudiced, the Second Circuit has instructed district
courts to consider "whether the assertion of the new claim would:
(i) require the opponent to expend significant additional
resources to conduct discovery and prepare for trial; (ii)
significantly delay the resolution of the dispute; or (iii)
prevent the plaintiff from bringing a timely action in another
jurisdiction." Block, 988 F.2d at 350.
None of these factors are implicated by the instant motion. No
trial date has yet been set, nor has discovery been completed.
Although the proposed amendments would implead additional
parties, Gianni's claims against TSI and TSIE do not raise
factual claims unrelated to the events its original third-party
complaint. Cf. Clark v. World Cable Communications, Inc.,
166 F.3d 1199, 1998 WL 907904, at *3 (2d Cir. Dec. 23, 1998). In
fact, there is no indication — and, furthermore, no showing by
the motion opponents — that the addition of TSI and TSIE would in
any way materially affect the duration or scope of discovery.
Regardless, even if discovery were prolonged, "the adverse
party's burden of undertaking discovery, standing alone, does not
suffice to warrant denial of a motion to amend a pleading."
United States v. Continental Ill. Nat'l Bank & Trust Co.,
889 F.2d 1248, 1255 (2d Cir. 1989) (citing S.S. Silberblatt,
608 F.2d 28 at 43). Allegations that an amendment will require the
expenditure of additional time, effort, or money do not
constitute "undue prejudice." Block, 988 F.2d at 351.
Therefore, the motion opponents have offered nothing to suggest
that leave to amend should not be "freely granted." Fed.R.Civ.P.
For the foregoing reasons, Gianni's motion for a finding of
civil contempt is
HEREBY DENIED with respect to Foldom, and HEREBY GRANTED with
respect to Alfredo Versace. Moreover, Gianni's motion for leave
to amend its pleadings in the A.V. Action is HEREBY GRANTED.
Gianni shall serve and file its amended pleadings within fourteen
days of the date of this Order.