United States District Court, S.D. New York
July 12, 2004.
Donini International, S.P.A. Plaintiff,
Satec (U.S.A.) LLC and Cleaners Family, Inc. Defendants.
The opinion of the court was delivered by: CHARLES HAIGHT, District Judge
MEMORANDUM OPINION AND ORDER
In this suit brought under the Lanham Act, 15 U.S.C. § 1125(a),
plaintiff moves for a preliminary injunction. Defendants oppose
plaintiff's motion, and have filed separate motions to dismiss
the complaint or, in the alternative, for change of venue. This
Memorandum Opinion and Order resolves these outstanding motions.
Plaintiff is an Italian corporation that specializes in the
manufacture, sale, and distribution of commercial dry cleaning
equipment. Defendant Satec LLC ("Satec") is a New Jersey
corporation that sells and distributes commercial dry cleaning
equipment manufactured by non-party Satec GMBH, a German
corporation. According to the Memorandum of Law filed by Satec in
support of its motion ("Satec's Motion"), the "two members of"
Satec are Abraham Cho and Esther Cho. Satec's Motion at 4.
Neither Abraham Cho nor Esther Cho is a party to the present suit.
Defendant Cleaners Family, Inc. ("Cleaners Family"), a New Jersey
corporation, publishes a trade magazine that caters to the dry
cleaning and laundry industry. Cleaners Family is a sole
proprietorship of Abraham Cho and Esther Cho. Satec's Motion at
4. Cleaners Family is, however, under the day-to-day charge of
Jung Chull Choi, who is also not party to the present suit. Id.
Plaintiff was a presenter at an April 2002 trade show for the
dry cleaning industry held in the Netherlands. Complaint at para.
26. In particular, plaintiff had on display its model known as
the "Swing T320." Id. During a demonstration of the machine on
April 6, 2002, a section of glass on the door of the machine
broke, allowing some solvents previously contained in the machine
to leak out. Id. What caused the glass to break and how
extensive was the damage to the machine are disputed issues of
fact. Plaintiff claims that the break was minor and due entirely
to a defect in the glass. Defendants claim that the machine
exploded, ejecting pieces of broken glass some distance from the
machine and precipitating the release of noxious fluid and gas.
Defendant Cleaners Family reported its version of these events
in a June 2003 article in Cleaners Family magazine dealing
principally with the potential dangers of hydrocarbon dry
cleaning machines. Complaint at paras. 19-25. Specifically, this
article included a picture or what was purported to be the Swing
T320 machine on display at the April 2002 show with its door
"completely exploded and broken." Complaint at para. 23. The
article went on to provide commentary critical of the manufacture
and safety of Donini dry cleaning machines. Complaint at para.
24. Plaintiff, through counsel in Italy, contacted Satec and Satec
GMBH via letter on July 3, 2003. Complaint at paras. 39-41. In
that letter, plaintiff contested the accuracy of the June 2003
article in Cleaners Family magazine and requested that Satec and
Satec GMBH publish a correction in the next edition of Cleaners
Family magazine. Plaintiff did not receive a response to this
Another article critical of the manufacture and safety of
Donini products appeared in the November 2003 edition of Cleaners
Family magazine. Complaint at paras. 18-19, 36. This article also
referred to events at the April 2002 trade show, again alleging
that the Swing T320 had exploded during a demonstration.
Plaintiff filed the present law suit with the Clerk of the
Southern District of New York on November 26, 2003. In the
Complaint plaintiff asserted that Satec and Cleaners Family
conspired to harm plaintiff's reputation, business prospects, and
trademark by publishing false, misleading, and libelous
statements about Donini and Donini products in the June 2003 and
November 2003 editions of Cleaners Family magazine, in violation
of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). Plaintiff has also
asserted subject matter jurisdiction under 28 U.S.C. § 1332
(a)(2). The Complaint also contains New York statutory and common
law claims under the principle of supplemental jurisdiction,
28 U.S.C. § 1367(a).
On December 23, 2003 plaintiff moved for a preliminary
injunction to prevent defendants from "using and diluting the
Donini trade name and service mark." On December 23, 2003 I
issued an Order to Show Cause on the motion and scheduled its
return for January 9, 2004. On the consent of counsel for all
parties the hearing scheduled for January 9, 2004 was adjourned until March 1, 2004.
This adjournment provided the defendants with sufficient time to
file the present motions, which include oppositions to
plaintiff's request for an injunction.
I conducted a hearing on the motion for preliminary injunction
on March 1, 2004. I heard testimony from Joseph Reuter, a sales
and export manager working for Satec GMBH, who was present at the
trade show on April 6, 2002, and Ati Winters, who was present and
working at the Donini display on April 6, 2002. At the end of the
hearing I reserved decision on the motion for preliminary
injunction, granted plaintiff additional time to respond to
defendants' motions, and provided defendants additional time to
reply. All parties have made their submissions. Upon a review of
the record before me and for reasons set forth below, I grant
defendant Satec's motion to dismiss, grant in part and deny in
part defendant Cleaners Family's motions, and decline to issue
plaintiff's requested preliminary injunction.
Defendants' Motions to Dismiss
The Court will first address defendants' motions to dismiss the
complaint pursuant to Rule 12(b)(6), Fed.R. Civ. P., for failure
to state a claim upon which relief can be granted.
For the purposes of "a 12(b)(6) motion a court must treat as
true the pleading's factual allegations," Toussie v. Powell,
323 F.3d 178, 180 (2nd Cir., 2003), and draw all reasonable
inferences from those facts in favor of the plaintiff. See Gant
v. Wallingford Board of Education, 69 F.3d 669, 673 (2d Cir. 1995). The Court
must not dismiss the action "unless it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief." Conley v. Gibson,
355 U.S. 41, 45-46 (1957); Frasier v. G.E. Co., 930 F.2d 1004, 1007 (2d
Cir. 1991). However, "[c]onclusory allegations or legal
conclusions masquerading as factual conclusions will not suffice
to prevent a motion to dismiss," 2 James Wm. Moore, Moore's
Federal Practice § 12.34[b] (3d ed. 2001). See also
Electronics Communications Corp. v. Toshiba America Consumer
Products, Inc., 129 F.3d 240, 243 (2d Cir. 1997), (the holding
in Conley v. Gibson "does not permit conclusory statements to
substitute for minimally sufficient factual allegations")
(citations and internal quotations marks omitted).
While plaintiff's motion for preliminary injunction was,
consistent with the requirements of Local Rule 7.1, accompanied
by the required memorandum of law, plaintiff has failed to file a
memorandum of law with its papers opposing defendants' motions.
The Court declines defendants' requests, stated in reply
memoranda from both Satec and Cleaners Family, to grant
defendants' motions to dismiss by default. The Court will,
rather, decide the motions on the record as it stands.
Satec's Motion to Dismiss for Failure to State a Claim
Defendant Satec moves for dismissal on the ground that
"Plaintiff fails to show any connection between [Family Cleaners]
and [Satec] that would support any basis for [Satec] being made a
party to this action." Satec's Motion" at 8. All of plaintiff's
claims in this lawsuit derive from the content of the June 2003 and
November 2003 editions of Cleaners Family magazine. While
responsibility for this content can reasonably be ascribed to
Cleaners Family, the company that publishes Cleaners Family
magazine, it is not obvious from the Complaint how that
responsibility can devolve upon Satec.
Plaintiff attempts to establish Satec's liability by alleging a
conspiracy between Satec and Cleaners Family. "Civil conspiracy
is not recognized as an independent tort in [New York]." Walters
v. Pennon Assocs., Ltd., 591 N.Y.S.2d 74, 75 (N.Y. App. Div.,
1992). "Allegations of conspiracy are permitted only to connect
the actions of separate defendants with an otherwise actionable
tort." Alexander & Alexander, Inc. v. Fritzen, 68 N.Y.2d 968,
969 (N.Y., 1986) (citations omitted).
To sustain a claim for conspiracy a plaintiff must allege and
prove a corrupt agreement between two or more parties, an overt
act, intentional participation in the furtherance of the
conspiracy, and a causal connection to the claimed damages. See
Melnitzky v. Rose, 299 F. Supp.2d 219, 227 (S.D.N.Y., 2004);
Suarez v. Underwood, 426 N.Y.S.2d 208, 210 (N.Y. Sup. Ct.,
1980). See also N.Y. CPLR § 3011, Form 429; N.Y.; CPLR § 3013
("Statements in a pleading shall be sufficiently particular to
give the court and parties notice of the transactions,
occurrences, or series of transactions or occurrences, intended
to be proved and the material elements of each cause of action or
defense."). Conclusory claims of conspiracy that are not pleaded
with sufficient factual grounding should be dismissed. See
Newgold. v. Bon Ray Hotel Corp., 32 N.Y.S.2d 589 (N.Y. App.
Div., 1942); Walters v. Pennon Assocs., Ltd., 591 N.Y.S.2d at
75; Suarez v. Underwood, 426 N.Y.S.2d at 210. In the Complaint, plaintiff alleges that "upon information and
belief, defendant Satec controls, directly or indirectly operates
and/or publishes on a quarterly basis, the Cleaners Family trade
magazine." Complaint at para. 17. The Complaint further alleges
that "upon information and belief, Satec caused and conspired
with Cleaners Family to publish that false and defamatory
November 2003 article about Donini and its products." Complaint
at para. 19. The principal factual bases for these conclusions
seem to be that both entities are alleged to be at least
partially owned by the same people, Abraham Cho and Esther Cho,
and that both entities are alleged to have the same address. Also
relevant is Satec's report that it had several representatives at
the April 2002 trade show in the Netherlands, two of whom "were
standing approximately ten (10) meters away from a Donini
machine, Model T320, and heard a loud explosion equivalent to a
forced slamming of a heavy door, or a sound of a firecracker."
Satec's Motion at 5.
While these facts might provide ground for speculation about
conspiracy or actual corporate control, they do not provide
sufficient factual bases for alleging either. The Complaint does
not allege a specific agreement between Satec and Cleaners
Family. It does not allege any specific overt action by Satec.
There is also no allegation of sufficient corporate entanglement
to justify any imputation of direct responsibility on the part of
Satec for the contents of Cleaners Family magazine. In short, the
Complaint does not provide a factual basis from which it can be
inferred that Satec did anything to cause the offending articles
to be published by Cleaners Family or that Satec is otherwise
liable for the contents of Cleaners Family magazine. Plaintiff has failed to plead facts sufficient to maintain a
claim against Satec. On this basis, Satec's motion is granted.
Plaintiffs claims against Satec are dismissed in their entirety
Cleaners Family's Motion to Dismiss for Lack of Personal
Cleaners Family moves for dismissal on the basis that this
Court, sitting in New York, does not have personal jurisdiction
over Cleaners Family, which is a New Jersey Corporation with its
principal place of business in New Jersey.
In the Complaint, plaintiff asserts that this Court has
jurisdiction under 28 U.S.C. § 1332(a)(2). Complaint at para. 15.
A federal district court sitting in diversity must apply the
forum state's law to determine the extent of its jurisdiction
over parties. See CutCo Industries v. Naughton, 806 F.2d 361,
365 (2d Cir., 1986). Plaintiff also claims that this Court has
subject matter jurisdiction under 28 U.S.C. § 1331,
15 U.S.C. § 1121, and 28 U.S.C. § 1367. Complaint at para. 15.
15 U.S.C. § 1121 grants to the federal courts original jurisdiction over
Lanham Act claims. 28 U.S.C. § 1331 grants original jurisdiction
to the federal courts over all civil actions arising out of the
laws of the United States. Plaintiff's first cause of action in the Complaint is brought
under 15 U.S.C. § 1125(a)(1)(B), the federal Lanham Act. "In a
federal question case, where the defendant resides outside the
forum state, federal courts apply the forum state's personal
jurisdiction rules if the applicable federal statute does not
provide for national service of process. Because the Lanham Act
does not provide for national service of process, the New York
state long-arm statute governs this inquiry." Sunward Elecs.,
Inc. v. McDonald, 362 F.3d 17, 22 (2nd Cir., 2004) (citations
omitted). Thus, whether subject matter jurisdiction is based on
original jurisdiction or on diversity jurisdiction, New York
state law governs this Court's ability to assert jurisdiction
over the parties in this case.*fn2
In assessing whether a non-domiciliary is amenable to the
jurisdiction of a federal district court, "the court must look
first to the long-arm statute of the forum state." Bensusan
Rest. Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997). "If the
exercise of jurisdiction is appropriate under that statute, the
court must decide whether such exercise comports with the
requisites of due process." Id. The jurisdiction of New York
courts over non-domiciliaries is established by N.Y. CPLR § 302.
§ 302(a)(1) provides the only potential basis for jurisdiction in
this case.*fn3 N.Y. CPLR § 302(a)(1) provides for jurisdiction over a party
that "transacts any business within the state or contracts
anywhere to supply goods or services in the state." It
"authorizes the court to exercise jurisdiction over
nondomiciliaries for tort and contract claims arising from a
defendant's transaction of business in [New York]. It is a
`single act statute' and proof of one transaction in New York is
sufficient to invoke jurisdiction, even though the defendant
never enters New York, so long as the defendant's activities [in
New York] were purposeful and there is a substantial relationship
between the transaction and the claim asserted." Kreutter v.
McFadden Oil Corp., 71 N.Y.2d 460, 467 (N.Y., 1988). See also
POSVEN v. Liberty Mut. Ins. Co., 303 F. Supp.2d 391, 397
(S.D.N.Y., 2004) ("Under section 302(a)(1), jurisdiction is
proper when: (1) the defendant has transacted business in New
York; and (2) the cause of action arises out of the subject
matter of the transacted business.) (citing Cutco Indus., Inc.
v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986)).
"A nondomiciliary `transacts business' under CPLR 302(a)(1)
when he `purposefully avails [himself] of the privilege of
conducting activities within [New York], thus invoking the
benefits and protections of its laws,'" POSVEN v. Liberty Mut.
Ins. Co., 303 F. Supp.2d at 397. (quoting McKee Electric Co.
v. Rauland-Borg Corp., 20 N.Y.2d 377, 382 (N.Y., 1967)). This test is, in essence, the same
as that established by the United States Supreme Court to
evaluate the constitutionality of personal jurisdiction under
long-arm statutes. See e.g. World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980) ("When a corporation
`purposefully avails itself of the privilege of conducting
activities within the forum State,' it has clear notice that it
is subject to suit there, and can act to alleviate the risk of
burdensome litigation by procuring insurance, passing the
expected costs on to customers, or, if the risks are too great,
severing its connection with the State.") (quoting Hanson v.
Denckla, 357 U.S. 235 (1958)).
In the Complaint, plaintiff asserts that "Cleaners Family is a
trade magazine printed in the Korean language and distributed to
dry cleaners and laundry cleaning businesses and workers
throughout the United States, including New York." Complaint at
para. 12. Assuming, as I must on a motion to dismiss, that this
is so, Cleaners Family has purposively conducted business in New
York by mailing its product to specific consumers in New York.
There is some suggestion that Cleaners Family may not charge
recipients for the magazine. See Satec's Motion at 4 ("the
magazine is offered free of charge to interested readers"). This
describes the nature of Cleaners Family's business. It does not
alter the fact that it has intentionally conducted that business
in New York. Moreover, this business, the distribution of
Cleaners Family magazine, is directly related to the causes of
action in this case, all of which arise from articles published
in the magazine and distributed in New York.
On these facts, assertion of jurisdiction over Cleaners Family
pursuant to N.Y. CPLR § 302(a)(1) is appropriate. Cleaners Family
intentionally mailed its magazine to a list of recipients in New York. In choosing to do so, Cleaners
Family should have foreseen the possibility of being haled into
court in New York. If Cleaners Family wanted to avoid being
called to answer in a New York court then it should have
refrained from distributing the magazine in New York to New York
residents. There is, for these same reasons, no constitutional
bar to exercise of jurisdiction over Cleaners Family in this
case. See e.g. Keeton v. Hustler Magazine, Inc., 465 U.S. 770,
774 (1984) (assertion of personal jurisdiction over a
non-domiciliary magazine publisher found to be constitutional
based on the publishers purposeful distribution of its magazine
in the state). Cleaners Family's motion to dismiss for want of
personal jurisdiction is denied.
Cleaners Family's Motions for Dismissal for Improper Venue and
for Change of Venue
Defendant Cleaners Family moves for dismissal pursuant to
Rule 12(b)(3), Fed.R. Civ. P., claiming improper venue.
28 U.S.C. § 1391(b) states, in pertinent part that a "civil action wherein
jurisdiction is not founded solely on diversity of citizenship
may, except as otherwise provided by law, be brought only in (1)
a judicial district where any defendant resides, if all
defendants reside in the same State . . ." 28 U.S.C. § 1391(c)
states that "[f]or purposes of venue under this chapter, a
defendant that is a corporation shall be deemed to reside in any
judicial district in which it is subject to personal jurisdiction
at the time the action is commenced."*fn4 Jurisdiction over the subject matter of this case is, as was
pointed out supra, not based solely on diversity. Cleaners
Family is the only remaining defendant. The Court has already
held that Cleaners Family is amenable to the jurisdiction of this
Court. It follows that, under 28 U.S.C. § 1391(b) and (c), the
Southern District of New York is a proper venue for the present
To defend itself in this case, Cleaners Family may be required
to send representatives across the Hudson River. What minimal
hardship this may impose on defendant is outweighed by
plaintiff's interest in choosing its forum and by New York's
interest in adjudicating claims affecting its citizens.
Defendant's motion to dismiss for lack of venue and its motion
for change of venue are denied.
Cleaners Family's Motion to Dismiss Plaintiff's Lanham Act
Plaintiff's third cause of action is for false description and
false representation in violation of 15 U.S.C. § 1125(a)(1)(B).
The statute states that "[a]ny person who, on or in connection
with any goods or services, or any container for goods, uses in
commerce any word, term, name, symbol, or device, or any
combination thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading representation of fact, which . . . in commercial advertising or
promotion, misrepresents the nature, characteristics, qualities,
or geographic origin of his or her or another person's goods,
services, or commercial activities, shall be liable in a civil
action by any person who believes that he or she is or is likely
to be damaged by such act." 15 U.S.C. § 1125.
To sustain its 15 U.S.C. § 1125(a)(1)(B) claim, plaintiff must
allege facts that reasonably support the conclusion that
"misleading or untruthful statements have been made for the
purpose of commercial advertising or promoting a party's goods,
services, or commercial activities." Nadel v. Play-By-Play Toys
& Novelties, Inc., 208 F.3d 368, 383 (2d Cir., 2000). "In this
circuit, to constitute `commercial advertising or promotion'
under the Lanham Act, a statement must be: (1) `commercial
speech,' (2) made `for the purpose of influencing consumers to
buy defendant's goods or services,' and (3) . . . `disseminated
sufficiently to the relevant purchasing public.'" Gmurzynska v.
Hutton, 355 F.3d 206, 210 (2d Cir., 2004) (citations omitted).
Plaintiff's claim in this case is deficient as to the first two
of these required prongs.
First, Cleaners Family is, according to the Complaint, "a trade
magazine." Complaint at para. 12. The statements that give rise
to this complaint were allegedly made in two articles published
in the magazine. A "journalist's article is not commercial
advertising, commercial promotion, or commercial speech. Rather,
it is speech that is traditionally granted full protection under
the First Amendment." Gmurzynska v. Hutton, 355 F.3d at
210-211. See also Boule v. Hutton, 328 F.3d 84, 91-92 (2d Cir.
2003) (advising courts to take care not to allow "over extension"
of the Lanham Act to compromise First Amendment freedoms). No
matter how critical of plaintiff, and no matter how true or false, the articles in Cleaners Family
magazine are not commercial speech. As such, they cannot support
a Lanham Act claim.
Second, Cleaners Family is not in the business of selling any
goods or services that could have been promoted by statements
contained in the articles in question. Cleaners Family is a trade
magazine. The June 2003 and November 2003 articles did not
provide commercial promotion for the magazine itself.
Plaintiff attempts to circumvent these requirements by alleging
a conspiracy between Cleaners Family and Satec. The Court has
already dismissed claims based on this alleged conspiracy. Even
were this not so, where the individual acts of a defendant do not
rise to a Lanham Act violation "allegations of conspiracy cannot
transform them into such." Gmurzynska v. Hutton, 355 F.3d at
211 (citing World Wrestling Fed'n Entm't, Inc. v. Bozell,
142 F. Supp.2d 514, 532 (S.D.N.Y. 2001)). Plaintiff's claim against
Cleaners Family fails to satisfy two essential prongs of a claim
under 15 U.S.C. § 1125(a)(1)(B). Speculation about conspiracies
cannot be used to remedy these deficits. Plaintiff's claim for
relief under the Lanham Act is dismissed with prejudice.*fn6
Plaintiff's Motion for a Preliminary Injunction Plaintiff seeks an order from the Court "enjoining the
defendant during the pendency of this action from using and
diluting the Donini trade name and service mark." Show Cause
Order at 1. In essence, plaintiff is asking the Court to order
Cleaners Family not to write about plaintiff in its magazine or
elsewhere. Such a request for prior restraint of expression is
subject to a "heavy presumption against its constitutional
validity." Metropolitan Opera Assoc. v. Local 100,
239 F.3d 172, 176 (2d Cir., 2001) (quoting Organization for a Better
Austin v. Keefe, 402 U.S. 415, 419 (1971) (other citations
omitted). In addition to this constitutional concern, the
long-standing rule in this Circuit is that equity will not enjoin
threatened libel or defamation since there are adequate legal
remedies available for damages arising from harmful speech. See
Metropolitan Opera Assoc. v. Local 100, 239 F.3d at 177;
American Malting Co. v. Keitel, 209 F. 351, 354 (2d Cir. 1913)
(declining to issue an injunction against the publication of
printed circulars that allegedly defamed the plaintiff's business
and trade practices).
According to the Complaint, Cleaners Family is a trade
magazine. It has a First Amendment right to report and comment on
issues relevant to the dry cleaning industry. If plaintiff finds
that future editions of the magazine include actionable content
then they may, as they have done here, seek remedy at law.
Plaintiff's motion for an injunction is denied.
In accordance with the foregoing, the Court makes the following
1. All claims against defendant Satec are dismissed without
prejudice. 2. Defendant Cleaners Family's motion to dismiss for lack of
personal jurisdiction is denied.
3. Defendant Cleaners Family's motion to dismiss for improper
venue is denied.
4. Defendant Cleaners Family's motion for change of venue is
5. Plaintiff's claim based on alleged violations of
15 U.S.C. § 1125(a)(1)(B) is dismissed with prejudice.
6. Plaintiff's request for an injunction is denied.
7. Plaintiff and defendant Cleaners Family, the remaining
parties, are directed to comply with Rule 26(f), Fed.R.Civ.P.
It is SO ORDERED.