United States District Court, S.D. New York
March 26, 2004.
MARIO VALENTE COLLEZIONI, LTD., Plaintiff, -against- AAK LIMITED and MAURICE IAN KINDLER, Defendants
The opinion of the court was delivered by: ROBERT PATTERSON, Senior District Judge
OPINION AND ORDER
Defendants AAK Limited and Maurice Ian Kindler (collectively,
defendants") move for the Court to reconsider a portion of its opinion
dated September 8, 2003 pursuant to Fed.R.Civ.P. 60(b) and Rule 6.3 of
the Local Civil Rules. The portion of the Court's opinion in question
granted the summary judgment motion of Plaintiff Mario Valente
Collezioni, Limited ("Plaintiff') against Defendants on the issue of
collateral estoppel on the Plaintiff's claim of unfair competition.
Because the facts of the case as pleaded have been laid out in detail
in the September 8, 2003 opinion, an abbreviated summary is provided
A. Procedural History
In 1997 Plaintiff brought an action for breach of contract, trademark
infringement and unfair competition against Confezioni Semeraro Paulo,
S.R.L, et. al. (the "Semeraro Defendants"). The Semeraro Defendants, who
are located in Italy, did not respond; therefore a
default judgment was entered against them. See Mario Valente
Collezioni, Ltd. v. Confezioni Semeraro Paulo, S.R.L., 115 F. Supp.2d 367,
369 (S.D.N.Y. 2000). Magistrate Judge Eaton held an inquest in
order to determine a recommendation for damages to be awarded to
Plaintiff. The Semeraro Defendants did not appear at the inquest. The
Semeraro Defendants also defaulted on a subsequent action commenced by
Plaintiff in Italy in order to collect the judgment awarded to them.
The next actions in the Semeraro litigation were described by this
Court in its September 8, 2003 opinion as follows:
On March 24, 1999, the Semeraro defendants filed a
motion before Judge Kaplan, pursuant to Rules
55(c) and 60(b) of the Federal Rules of Civil
Procedure to vacate the default judgment entered
against them, claiming lack of jurisdiction.
[Mario Valente Collezioni, Ltd.,
115 F. Supp.2d at 368-69.] After an evidentiary hearing
conducted on February 8, February 9 and June 20,
2000, during which Defendant Kindler, Mr.
Semeraro, his son-in-law and other witnesses
testified, (id. at 376) Judge Kaplan denied the
motion. Id. at 378. The decision was appealed by
the Semeraro defendants, and the Second Circuit
held that the district court properly found
personal jurisdiction over the Semeraro
defendants, but erred in failing to perform a
federal due process analysis. Mario Valente
Collezioni, Ltd. v. Confezioni Semeraro
Paolo. S.R.L., 264 F.3d 32 (2d Cir. 2001. The
Second Circuit affirmed and remanded the case back
to Judge Kaplan on the due process issue. Id. at
38. On remand, Judge Kaplan found that the
exercise of personal jurisdiction over the
Semeraro defendants did not violate due process of
law and the judgment became final. Mario
Valente Collezioni, Ltd. v. Confezioni Semeraro
Paolo. S.R.L., 174 F. Supp.2d 170, 176
(S.D.N.Y. 2001). No part of the judgement has been
paid. (Selig Dep. at 244.)
Mario Valente Collezioni, Ltd. v. AAK Limited and Maurice Ian
Kindler, 280 F. Supp.2d 244, 246-47 (S.D.N.Y. 2003).
In January 2002, Plaintiff filed a complaint against Defendants
alleging unfair competition, trademark infringement and breach of
contract. On September 8, 2003, the Court issued an opinion granting
Defendants' motion for summary judgment on Plaintiff's claims of
breach of contract and trademark infringement, and granting
Plaintiff's cross-motion for summary judgment with respect to Defendants'
liability for unfair competition. Id. Defendants now move the Court to
reconsider its decision with respect to their liability for unfair
B. Summary of Facts
In 1994 Paolo Semeraro and A.E.D. Imports, Ltd. entered into an
agreement for the distribution of coats in the United States. (Defs.'
Statement Material Facts As to Which There Is No Genuine Issue to be
Tried at ¶ 6; Pl.'s Am. Counterstatement Undisputed Facts at ¶
6.) The agreement stated, "Confezioni PAOLO SEMERARO hereby undertake
that no clothing will be offered by them or anyone acting on their behalf
for sale in the U.S.A. except through A.E.D. IMPORTS LTD. their appointed
DISTRIBUTORS/IMPORTERS. THIS AGREEMENT IS VALID ONLY FOR
PRODUCTION OF MEN'S OVERCOATS." (Notice of Mot, Mar. 13, 2003, Ex. 4.)
Judge Kaplan found that "[b]y course of dealing, the parties had
substituted Plaintiff for A.E.D. as the exclusive U.S. distributor of
defendants' overcoats." Mario Valente Collezioni,
115 F. Supp.2d at 375 n.40.
Defendant Maurice Kindler is the principal owner of AAK, a United
Kingdom limited liability corporation, which sells garments at
whole-sale. (Defs.' Statement Material Facts As to Which There Is No
Genuine Issue to be Tried at ¶¶ 3, 4; Pl.'s Am. Counterstatement
Undisputed Facts at ¶¶ 3, 4.) Kindler testified at the
evidentiary hearing before Judge Kaplan that AAK was the exclusive
distributor in the United Kingdom of coats made by the Semeraro
defendants. (Hr'g Tr. June 20, 2000 at 42-43 (No. 97 Civ. 2008, Docket
Judge Kaplan found:
Kindler, AAK's chairman, knew that plaintiff had
the exclusive right to sell Mario Valente
overcoats in the United States. But he admitted
that Semeraro told him that he had had a falling
out with Selig*fn1 and that Selig no longer was
buying from him. So Kindler set up a meeting with
the Bloomingdale's buyer who previously had bought
Mario Valente coats from plaintiff. He also
solicited the aid of his friend, Joseph Sheer, in
selling defendants' overcoats in the United
States, and Sheer contacted Lord & Taylor,
another of plaintiff's major customers.
Mario Valente Collezioni, Ltd., 115 F. Supp.2d at 374-75
(footnotes omitted). Judge Kaplan also found that as a consequence of the
contacts of Kindler and Joseph Sheer (acting as Kindler's agent) with
Bloomingdale's and Lord & Taylor, respectively, the two stores
"dropped plaintiff as a supplier both for private label and Mario Valente
brand coats." Id. Judge Kaplan concluded:
[I]t is more likely than not that Semeraro and
Kindler together hatched a scheme to dump
plaintiff as the U.S. distributor of Semeraro's
products, to replace it with Kindler's firm, and
to persuade plaintiff's existing U.S. customers
and others that plaintiff no longer was a factor
in the business and that AAK was the exclusive
source in the United States of Mario Valente brand
goods as well as Semeraro's other products. In
such circumstances, Semeraro is legally
responsible for all actions by Kindler and his
agents in furtherance of the plan.
Mario Valente Collezioni, Ltd., 115 F. Supp.2d at 376.
It is clear from Judge Kaplan's opinion that since Kindler acted as
Semeraro's agent, Kindler's actions in New York to divert business away
from Plaintiff subjected the Semeraro Defendants to the Court's
jurisdiction on the tort claims under C.P.L.R. § 302(a)(2). See
Mario Valente Collezioni, Ltd., 115 F. Supp.2d at 376-77.
Kindler testified as a witness for the Semeraro Defendants on June 20,
2000, the last of the three days of hearings held by Judge Kaplan, on the
jurisdictional issue of whether the
appropriate to do so. Fed.R.Civ.P. 60(b). The most relevant set
of reasons provided is "mistake, inadvertence, surprise, or excusable
neglect." Id. Local Rule 6.3 provides the filing guidelines for motions
for reargument. Under Local Rule 6.3, a motion for reargument may be
granted when there is a "need to correct a clear error or prevent
manifest injustice" Morales v. Quinfiles Transnational Corp.,
25 F. Supp.2d 369, 372 (S.D.N.Y. 1998) (quoting Doe v. New York
City Dep't of Soc Servs., 709 F.2d 782, 789 (2d Cir. 1983)).
Furthermore, a reargument may be granted when a court has "overlooked
controlling decisions or factual matters which were placed before [it] in
the underlying motion." Bonnie and Co. Fashions v. Banker's Trust
Corp., 171 F.R.D. 79, 83-84 (S.D.N.Y. 1997). Nonetheless, the party
requesting the reargument "may not advance new facts, issues, or
arguments not previously presented to the court." Litton Industries.
Inc. v. Lehman Bros. Kuhn Loeb, Inc., 1989 WL162315 at * 3 (S.D.N.Y.
Aug. 4, 1989). Nor may it make "repetitive arguments on issues that have
been considered folly by the court." In Re Houbigant, Inc.,
914 F. Supp. 997, 1001 (S.D.N.Y. 1996).
In the case at hand, the Court did not grant adequate deference to New
York State law concerning collateral estoppel, and so will reconsider its
previous decision in light of New York State law. In its previous
decision, the Court acknowledged that New York State law applies to the
issue of collateral estoppel in cases invoking diversity jurisdiction.
Mario Valente Collezioni, 280 F. Supp.2d at 252 (citing
Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497,
508-09 (2001)). Nonetheless, in its September 8, 2003 decision, the Court
relied on two federal decisions. See id. at 253, 257 (citing
Stichting Ter Behartiging Van De Belangen Van Oudaandeelhouders In
Het Kapitaal Van Saybolt International B.V. v. Schreiber,
327 F.3d 173,
185 (2d Cir. 2003)) and id. at 252, 257 (citing Marvel
Characters, Inc. v. Simon, 310 F.3d 280, 288-89 (2d Cir. 2002)).
In Marvel Characters, Inc. v. Simon the parties agreed that
`there is no discernable difference between federal and New York law
concerning res judicata and collateral estoppel" Marvel Characters,
Inc., 310 F.3d at 286. In Pike v. Freeman, the Second
Circuit stated `there appears to be no significant difference between New
York preclusion law and federal preclusion law" so the court made
determinations about res judicata based upon federal law. Pike v.
Freeman, 266 F.3d 78, 90 n.14 (2d Cir. 2001). The federal cases,
however, do not address the issue in this case: whether a court's
findings of fact and conclusions of law at an evidentiary hearing, in
connection with a motion to vacate a default judgment, are binding
collaterally on the indemnitee of the defendant in a later proceeding
brought against the indemnitee. New York cases provide a broader
articulation of the factors to consider in determining whether Defendants
had a full and fair opportunity to litigate the issues than the federal
cases relied on in the previous decision provide. Compare Marvel
Characters, Inc. v. Simon, 310 F.3d at 286 (declining to examine
whether there was a full and fair opportunity to litigate, because issue
found in previous litigation did not have a preclusive effect) and
Schreiber, 327 F.3d at 185 (holding (hat there is privity between
party in previous suit and party in current suit when party to previous
suit acts as fiduciary of party to the second suit or party to second
suit exercises some degree of control over presentation of party's case
at the first suit) with Schwartz v. Public Administrator of (he
County of the Bronx, 24 N.Y, 2d 65, 72, 298 N.Y.S.2d 955, 961 (1969)
(listing factors for court to consider in determining whether parties had
a full and fair opportunity to litigate an issue in a previous suit)
and Curry v. City of Syracuse, 316 F.3d 324, 332 (2d Cir. 2003)
law on collateral estoppel and citing factors listed in
Schwartz as necessary to consider in determining whether
collateral estoppel applies). But see Pompano-Windy City Partners,
Ltd. v. Bear, Steams & Co., 1993 WL 42786 at * 8 (S.D.N.Y. Feb.
17, 1993) (applying federal law to determine whether collateral estoppel
applies and listing factors of Restatement (Second) Judgments §
29 (1981) in considering whether there was a fall and fair opportunity to
litigate). The motion for reconsideration is granted so that the Court
may evaluate the issue in light of New York State law involving
collateral estoppel rather than depending on Marvel Characters
B. Collateral Estoppel
Plaintiff is not asserting collateral estoppel based upon the default
judgment against the Semeraro Defendants. Rather, collateral estoppel is
being asserted based solely on Judge Kaplan's finding of personal
jurisdiction in his decisions of September 8, 2000 and December 6, 2001.
Pursuant to New York's long arm statute, CPLR § 302, Judge Kaplan
found that the Semeraro Defendants committed a tortious act within the
state of New York. In order to make his findings, Judge Kaplan developed
his own record:
And it is essential to define the record on which
that question [whether Sermeraro is subject to New
York's long arm jurisdiction] must be decided, as
it differs in important respects from that which
was before the Magistrate Judge. . . .
Accordingly, the record that controls
determination of the jurisdictional issue is that
of the evidentiary hearing on the motion rather
than the inquest that followed the default
although it is important also to recognize that
parts of the inquest record were received into
evidence at the hearing.*fn2
Mario Valente, 115 F. Supp.2d at 373-74.
In cases like this, where plaintiff seeks to make offensive use of
collateral estoppel, the approach of the Supreme Court is `to grant trial
courts broad discretion to determine when it should be applied."
Parklane Hosiery Co. v. Shore, 99 S.Ct. 645, 651 (1979). In
diversity cases, the situation here, the Court should look to state law
in making determinations of collateral estoppel. Semtek Int'l
Inc., 531 U.S. at 508-09. "Collateral estoppel is a doctrine based
on general notions of fairness involving practical inquiry into the
realities of the litigation; it should never be rigidly or mechanically
applied." Matter of Halyalkar v. Board of Regents of State of New
York, 72 N.Y, 2d 261, 268-69 (1986) (citation omitted); see
also In Re Barton, 272 B.R. 61, 64 (N.D.N.Y. 2002) (citing
Halyalkar when applying New York laws of collateral estoppel in
federal court). In Gilberg v. Barbieri, the Court of Appeals
summarized the evolution of New York's law on collateral estoppel as
Until recently the prior determination generally
could not even be used against a party to the
prior suit unless his current opponent had also
been a party who would have been mutually bound by
the determination had it been unfavorable to him
(see Siegel, New York Practice, § 460). In
1967, however, we held that mutuality of estoppel
`is a dead letter' in this State (B.R. De
Witt. Inc. v. Hall, 19 N.Y.2d 141, 147, 278
N.Y.S, 2d 596, 225 N.E.2d 195 (1967)) and
subsequently in Schwartz, 24 N.Y.2d at
71, indicated that `New York law has now reached
the point where there are but two necessary
requirements for the invocation of collateral
estoppel. There must be an identity of issue which
has necessarily been decided in the prior action
and is decisive of the present action, and,
second, there must have been a full and fair
opportunity to contest the decision now said to be
controlling' (but, also, see People v.
Berkowitz, 50 N.Y, 2d 333, 344, 428 N.Y.S.2d 927,
406 N.E.2d 783 (1980), preserving the
mutuality concept in criminal cases).
Gilberg v. Barbieri, 53 N.Y.2d 285, 291 (1981).
Under New York State law, each party bears the burden of proving one of
the "requirements for the invocation of collateral estoppel" described in
Gilberg. Id. First, the party
who is asserting collateral estoppel, in this case Plaintiff, has
the burden of demonstrating that the issues in the present litigation are
identical to the issues of the prior determination, and that determining
those issues was decisive to the outcome of the previous proceeding and
to the determination to be made in the present proceeding. Kaufman
v. Eli Lilly and Co., 65 N.Y.2d 449, 455-56, 492 N.Y.S.2d 584, 588
(1985); see also Lennon v. Seaman, 2002 WL 109525 at *3
(S.D.N.Y. Jan. 28, 2002) (quoting Kaufman in applying New York
laws of collateral estoppel); Juan C. v. Cortines, 89 N.Y.2d 659,
667, 657 N.Y.S.2d 581, 585-86 (1997); Ryan v. New York Telephone
Company, 62 N.Y.2d 494, 500-01, 478 N.Y.S, 2d 823, 827 (1984);
Leonia Bank v. Kouri, 772 N.Y.S, 2d 251 (App. Div.
2004). Second, "the party attempting to defeat [the application of
collateral estoppel] has the burden of establishing the absence of a full
and fair opportunity to litigate the issue in the prior action."
Kaufman, 65 N.Y.2d at 456, 492 N.Y.S.2d at 588. 1. The
issues in the prior proceedings were identical to the current issues and
In order to prove identicality of issues, Plaintiff bears the burden of
demonstrating that each of the elements of the tort of Unfair Competition
pursuant to the Lanham Act was satisfied by the findings of Judge Kaplan
in support of his decision determining (hat New York did have personal
jurisdiction over the Semeraro Defendants. Section 43 of the Lanham Act
states that "[a]ny person who, on or in connection with any goods or
services . . . uses in commerce" a "false or misleading description of
fact" or a "false or misleading representation of fact" that is "likely
to . . . deceive as to the affiliation . . . of such person with
another person, or as to the . . . sponsorship . . . of his or her
goods . . . or commercial activities by another person" is liable
under the act. 15 U.S.C. § 1125(a)(1)(A).
In its opinion of September 8, 2003, the Court found that Judge
Kaplan's findings established that Defendants violated the Lanham Act.
Mario Valente Collezioni, Ltd., 280 F. Supp.2d at 255-56.
Defendants do not contest this in their Motion for Reconsideration.
Rather, they assert, "Judge Kaplan's findings that Kindler's conduct with
respect to Bloomingale's and Lord & Taylor was tortious was not
necessary to the determination of . . . whether the court had personal
jurisdiction over the Semeraro Defendants." (Mem. Supp. Defs.' Mot.
Reconsideration of Opinion & Order Dated Sept. 8, 2003 at 11.)
The Plaintiff must demonstrate the determination of the issue of
Kindler's conduct with respect to Bloomingale's and Lord & Taylor was
necessary to the finding of jurisdiction. Kaufman, 65 N.Y.2d at
456, 492 N.Y.S.2d at 588. "[T]he issue must have been material to the
first action or proceeding and essential to the decision rendered
therein." Ryan, 478 N.Y.S.2d at 826 (citing Silberstein v.
Silberstein, 218 N.Y. 525, 528, 113 N.E. 495 (1916); Hinchey v.
Sellers, 197 N.Y.S.2d 129 (1959); Ripley v. Storer,
309 N.Y. 506, 517 (1956); Ward v. Boyce, 152 N.Y. 191 (1897)).
"Additionally, the issue that was raised previously must be `decisive of
the present action.'" LaFleur v. Whitman, 300 F.3d 256, 271 (2d
Cir. 2002) (quoting Schwartz 24 N.Y.2d at 7l).*fn3
As explained above, in finding that Defendants committed the tortious
act of unfair competition, Judge Kaplan also found the elements of the
Lanham act were fulfilled. After hearing the testimony of Semeraro and
Kindler, Judge Kaplan also found that Kindler and Semeraro, "together
hatched a scheme to dump plaintiff as the U.S. distributor of Semeraro's
products." Mario Valente Collezioni Ltd., 115 F. Supp.2d
at 376. Judge Kaplan concludes "There is little doubt that the actions of
Semeraro and Kindler were tortious," and in supporting this statement he
adds, "by virtue of the agency relationship between Semeraro and Kindler,
Kindler's actions within New York subject Semeraro to jurisdiction under
[Newark's long arm statute]/" Id. at 376-77. Finding that Kindler
committed a tort in New York State was decisive in Judge Kaplan's finding
of personal jurisdiction over the Semeraro Defendants.*fn4 This Court's
prior opinion demonstrated that Judge Kaplan found in Plaintiff's favor
each element decisive to a determination that Defendants violated the
2. Full and fair opportunity to litigate
The Defendants must demonstrate that they lacked a "foil and fair
opportunity" to litigate the issue. Schwartz, 24 N.Y.2d at 71.
A "foil and fair opportunity" requires identity of parties or "privity"
of parties, and "a practical inquiry into `the realities of the
[previous] litigation.'" Gilberg v. Barbieri, 53 N.Y.2d at 292
(quoting Schwartz, 24 N.Y.2d at 72).
In their opposition papers to Plaintiff's motion for summary judgment,
Defendants assert that their interests were not adequately represented in
the litigation leading up to the default judgment by Magistrate Judge
Eaton. (Defs.' Reply Mem. Supp. Defs.' Mot. Summ. J. and Mem. Opp'n Pl.'s
Cross-Mot. Summ. J. at 20-21.) The relevant proceeding, however, is not
the default judgment before Magistrate Eaton, but the jurisdictional
hearing before Judge Kaplan.
Defendants were not a party to the proceeding before Judge Kaplan, but
(hey were in privity with the Semeraro Defendants. If the party against
whom estoppel is being asserted was not a party to the previous case, he
must have been in privity with a party in the first case in order for
collateral estoppel to apply. Gilberg, 53 N.Y, 2d at 291
(citing Postal Tel. Cable Co. v. Newport, 247 U.S. 464, 38 So.
Ct. 566 and Provident Bank v. Patterson, 390 U.S. 102, 88 So.
Ct. 733.) "In the context of collateral estoppel, privity does not have a
single well-defined meaning. Rather, privity is `an amorphous concept not
easy of application"' Buechel v. Bain, 97 N.Y.2d 295, 304,
740 N.Y.S.2d 252, 258 (2001) (citing Matter of Juan C. v. Cortines,
89 N.Y.2d 659, 667 (NY 1997)). The Supreme Court has stated, "We have
recognized an exception to the general rule [of identically of parties]
when, in certain limited circumstances, a person although not a party,
has his interests adequately represented by someone with the same
interests who is a party." Richards v. Jefferson County.
Alabama, 517 U.S. 793, 798, 116 S.Ct. 1761, 1766 (1996) (quoting
Martin v. Wilks, 490 U.S. 755, 762 n.2, 109 S.Ct. 2180, 2184
n.2 (1989)). New York courts have expanded the definition of privity:
We think the better rule, however, and that which
is actually applied in this State as well as in a
number of other jurisdictions, eschews strict
reliance on formal representative relationships in
favor of a more flexible consideration of whether
all of the facts and circumstances of the party's
and nonparty's actual relationship, their
mutuality of interests and the manner in which the
nonparty's interests were represented in the prior
litigation establishes a functional representation
such that "the nonparty may be thought to have had
a vicarious day in court' (Note, Collateral
Estoppel of Nonparties, 87 Harv.L.Rev. 1485,
Slocum on Behalf of Nathan A v. Joseph B, 588 N.Y.S.2d 930,
931 (App. Div. 1992) (quoted in Cowan v. Ernest Codelia,
P.C., 2001 WL 856606 at * 8 (S.D.N.Y. July 30, 2001)).*fn5
Under New York law an indemnitor/indemnitee relationship establishes
privity for the purposes of collateral estoppel Hinchey v.
Sellers, 7 N.Y, 2d at 295 (allowing insured/indemnitee to use facts
found in case against insurer/indemnitor defensively in subsequent case
brought by same plaintiff). Usually collateral estoppel is used
defensively by the indemnitor after an indemnitee has been found
not-liable. Here, though, collateral estoppel is being exerted against an
indemnitee after an indemnitor has been found liable. Defendants cite
Herbert Rosenthal Jewelry Corp. v. Zale Corp., 323 F. Supp. 1234
(S.D.N.Y. 1971), for the first time in their motion for
reconsideration, for the following proposition: "this Court has
specifically held that being an indemnitee does not bind a litigant to
determinations on claims litigated successfully against its indemnitor."
(Defs.' Mot. Recons. of Op. & Order Dated Sept. 8, 2003 at 7-8.) In
Zale, a 1971 case, the Court declined to find privity between
an indemnitee and an indemnitor when the indemnitor was sued first and
found liable. However, the Court applied federal law to the issue and
rested its decision in part on the fact that the second defendant was not
involved "in any manner" with the previous lawsuit. Zale,
323 F. Supp. at 1237. Here, on the other hand, the Court applies subsequent
New York law and the indemnified Defendant testified at the
jurisdictional hearing before Judge Kaplan.
Three factors taken in conjunction make this case unique and lead the
Court to find privity between Defendants and the Semeraro Defendants.
First, as Judge Kaplan found, there is a close relationship between the
Defendants and the Semeraro Defendants. Mario Valente
Collezioni, 115 F. Supp.2d at 376 (finding "Semeraro and Kindler
had a community of interest in violating plaintiff's exclusive rights to
Sermeraro's production and in persuading plaintiff's
customers that Kindler, and not plaintiff, was the only available
source of those goods . . . Semeraro is legally responsible for all
actions by Kindler and his agents in furtherance of the plan.") Also, the
Semeraro Defendants indemnified Kindler for the testimony he gave at the
hearing to determine whether jurisdiction existed in New York and they
are also indemnifying him in this action. (See Letter from
Rondos to Kindler of 6/1/00; Indemnification Agreement dated 6/8/02
submitted to Court by Defs. via letter of 1/15/04.) Additionally,
Defendants have admitted that Kindler was acting as the agent of the
Semeraro Defendants: "Kindler was acting at the indemnitors' request when
he attempted to sell coats to Lord & Taylor and Bloomingdale's."
(Letter from Martin B. Pavane, Esq. to Judge Patterson of 1/15/04 at 2.)
Second, in the prior case, the Semeraro Defendants had the same
interests as the Defendants and Defendants have presented no evidence
that those interests were not represented adequately. See
Richards, 517 U.S. at 798.*fn6 Judge Kaplan's findings were based
on the actions of Kindler and AAK. Semeraro had every incentive in the
proceedings before Judge Kaplan to litigate as vigorously as possible the
position that Kindler did not interfere with the business relationship of
Plaintiff with Bloomingdale's and Lord & Taylor. Semeraro himself
testified at the hearing. Had the Semeraro Defendants and Kindler
convinced Kaplan that AAK's and Kindler's actions did not constitute
tortious acts on behalf of the Semeraro Defendants, Judge
Kaplan would not have found jurisdiction and the Semeraro
Defendants would not have been liable to Plaintiff.
Third, a concern in granting privity (and thus collateral estoppel
effect) between an indemnitor and indemnitee in a situation where the
plaintiff has already succeeded in a claim against the indemnitor is that
the plaintiff would recover twice for the same injury. 18A Charles Alan
Wright, et al., Federal Practice and Procedure § 4463 (2d
ed. 2002). Here, however, Plaintiff has not recovered any damages awarded
to them in the previous judgment, and Defendants' indemnification
agreement assures them of a way to recover from the Semeraro Defendants.
Given the unique facts of this case, the Court finds privity between the
Semeraro Defendants and Defendants.
In applying New York State law of collateral estoppel, the Second
Circuit has stated:
In determining whether a party had a full and fair
opportunity to litigate the issue, the New York
Court of Appeals has instructed that `the various
elements which make up the realities of
litigation,' should be explored, including `the
size of the claim, the forum of the prior
litigation, the use of initiative, the extent of
the litigation, the competence and experience of
counsel, the availability of new evidence,
indications of a compromise verdict, differences
in applicable law and foreseeability of future
Curry, 316 F.3d at 332 (quoting Kosakow v. New
Rochelle Radiology Assoc., P.C., 274 F.3d 706
, 734 (2d Cir. 2001)
(quoting Schwartz, 24 N.Y, 2d at 72, 298 N.Y.S, 2d at 961)).
See also Restatement (second) of Judgments § 29 (1981)
(listing other factors to consider). Applying these factors, the Court
finds Defendants did have a full and fair opportunity to litigate in the
previous proceeding. The forum in both the previous and current cases is
the Southern District of New York. With over one month's notice of the
nature of the litigation, Kindler testified at the prior proceeding. At
the time, he did not choose to request his own attorney, apparently
satisfied with the hold harmless agreement. Kindler "had a full
opportunity to tell his story at the first trial in order to remove
himself from liability or to cast it elsewhere." Schwartz,
24 N.Y.2d 65, 72. Defendants have made no showing of lack of competence or
expertise of the counsel to the Semeraro Defendants when they were
litigating the issue of personal jurisdiction. Defendants have made no
showing of new evidence. The applicable law is the same in both cases.
Finally, it is clear that future litigation was foreseeable to the
Defendants, because Kindler obtained a "hold harmless" agreement before
testifying for the Semeraro Defendants at the jurisdictional hearing.
Upon reconsideration, the Court finds that collateral estoppel
precludes the parties from litigating whether Defendants committed unfair
competition, and that accordingly the extensive discovery requested by
Defendants is unnecessary The issue of damages remains to be determined.
IT IS SO ORDERED.