Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

TOMMY HILFIGER LICENSING, INC. v. BRADLEES

United States District Court, S.D. New York


October 5, 2004.

TOMMY HILFIGER LICENSING, INC., et al., Plaintiffs,
v.
BRADLEES, INC., et al., Defendants.

The opinion of the court was delivered by: RICHARD HOLWELL, District Judge

Supplemental Memorandum Opinion to Order of September 29, 2004

Plaintiffs PRL USA Holdings, Inc., Nike, Inc., adidas-Solomon AG, adidas International BV, and adidas America, Inc. (collectively, the "Trademark Holders") move for summary judgment against the malicious prosecution counterclaims asserted by defendants M&D Sportswear Corp. ("M&D") and Dalia Wallach (collectively, "Defendants"). For the reasons set forth below, Plaintiffs' motion is granted.

FACTS

  The following facts, unless otherwise noted, are not in dispute.*fn1 This matter stems from a police investigation launched in August 1999 in response to an "enormous" and "pervasive" criminal trademark counterfeiting problem faced by New York City. (See Resp. of Defs. M&D to Pl.'s Stmt. of Undisputed Facts ¶ 1. (hereinafter "M&D Stmt."); Dep. of David Hoovler, Mar. 31, 2003, at 222-23.) The New York City Police Department's Organized Crime Investigation Division Trademark Unit ("OCID") conducted an investigation, dubbed "Operation Broadway", of counterfeiting activity in the New York metropolitan area between August 1999 and June 2000.*fn2 (See M&D Stmt. ¶ 1.) At the request of OCID and the Bronx District Attorney, several clothing designers, including some but not all of the plaintiffs in this lawsuit, contributed approximately $75,000 to OCID to use for undercover purchases.*fn3 (See id. ¶ 6.)

  Between January and May 2000, Undercover Detective Shield No. 1277 ("UC 1277"), who had been a member of the New York City Police Department for 12 years, two of those as a detective assigned to OCID, made numerous purchases of clothing from manufacturers, and retail and wholesale vendors in the New York area who were suspected of selling counterfeit goods.*fn4 (See id. ¶ 7; Aff. of UC 1277, ¶ 2, attached as Ex. MM1 to Decl. of Michael D. Pantalony in Case No. 02 Civ. 1562 (hereinafter "2000 UC Aff.").) Among the goods purchased by UC 1277 were garments bearing the trademarks owned by the Trademark Holders that were purchased through Marty G. Mirkin. (See M&D Stmt. ¶ 8.) The Trademark Holders argue that the purchases were made "from Wallach, M&D and Mirkin, M&D's salesman." (Id.) Defendants argue that Mirkin "was an independent salesman for M&D [and that] no garments were purchased from Wallach." (Id.) The precise legal relationship between Mirkin and M&D is a fact in dispute in this litigation. However, it is not disputed that Dalia Wallach is the President and sole stockholder of M&D, a company she formed in 1998 to replace S&T Sportswear, which company was operated by her uncle Sam Wallach and father Teddy Wallach. (See Wallach Aff. ¶¶ 1-2, attached to Aff. of Steven H. Hollinstat in Opp'n to Pl./Countercl. Defs.' Mot. for Summ. J.) It is also not disputed that the goods purchased by UC 1277 through Mirkin (the "Undercover Goods") originated from M&D's warehouse at the Brooklyn Navy Yard and were shipped from that warehouse to a warehouse in the Bronx set up by OCID. (See M&D Stmt. ¶ 9.) Furthermore, it is not disputed that Mirkin's business cards stated "MGM Apparel Corp./M&D Sportswear Corp." (See Photocopy of business cards, attached as Ex. 3 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562.)

  In the course of purchasing the Undercover Goods, UC 1277 recorded multiple conversations he had with Mirkin, Dalia Wallach, and others regarding the purchase of goods from MGM/M&D. On January 10, 2000, UC 1277 called M&D's warehouse and spoke with Dalia Wallach. (See Conversation Tr., Jan. 10, 2000, at 1, attached as Ex. 5 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562 (hereinafter "Ex. 5").) After Dalia Wallach put UC 1277 on hold, Teddy Wallach, Dalia's father, picked up the telephone line and directed UC 1277 to go to M&D's "showroom" and "office" in Manhattan to view M&D's apparel: "You go up to MGM, M&D, in the Empire State Building. They're on the tenth floor, 10-0-3." (Id. at 3-5.) On January 13, 2000, UC 1277 called "MGM, M&D." (See Ex. 5, Conversation Tr., Jan 13, 2000, at 1.) Mirkin answered the telephone and explained to UC 1277 that an order for apparel had to be placed through Mirkin because Teddy Wallach is "just a warehouse." (Id. at 2.) After UC 1277 placed an order with Mirkin, Mirkin directed UC 1277 to call Teddy or Dalia Wallach to work out the shipping details. (See Ex. 5, Conversation Tr., Jan. 17, 2000, at 1-2.)

  In this way, UC 1277 placed four orders over the course of the investigation for Undercover Goods through Mirkin. (See Decl. of Undercover Detective 1277, ¶¶ 26, attached to Notice of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562 (hereinafter "2004 UC Decl.").) The first order, shipped from M&D's warehouse circa January 20, 2000, consisted of 49 alleged Nike shirts and six pairs of alleged Nike and Polo socks, for which UC 1277 paid $298.38. (See id.; Photocopy of check, attached as Ex. 6 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562.) The second order, shipped from M&D's warehouse circa February 25, 2000, consisted of 240 alleged Nike and adidas shirts, for which UC 1277 paid $1378.30. (See 2004 UC Decl. ¶ 26; Photocopy of check, attached as Ex. 7 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562.) The third order, shipped from M&D's warehouse circa March 28, 2000, also consisted of 240 alleged Nike shirts, for which UC 1277 paid $1319.80. (See 2004 UC Decl. ¶ 26; Photocopy of check, attached as Ex. 8 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562.) The fourth order, shipped from M&D's warehouse circa May 2, 2000, consisted of 288 alleged Nike and Polo shirts, for which UC 1277 paid $1443.96.*fn5 (See 2004 UC Decl. ¶ 26; 2000 UC Aff. ¶ 18.)

  After the Undercover Goods were delivered to the Bronx warehouse set up by OCID, samples of each shipment were sent to the Trademark Holders for examination. (See 2004 UC Decl. ¶ 22.) Only the Trademark Holders have the proprietary information necessary to determine whether goods are counterfeit. (See Dep. of Eric Dlinn, June 13, 2003, at 198-98.) Upon inspection, representatives of the Trademark Holders examined samples of the Undercover Goods and determined that almost all of the samples were counterfeit. (See M&D Stmt. ¶ 10; 2004 UC Decl. ¶¶ 22-23, 26; 2000 UC Aff. ¶¶ 9-10, 13-14, 17, 20-21.) After the Undercover Goods were examined, they were stored with the New York Police Department Property Clerk, who still has custody of the Undercover Goods to this day. (See 2004 UC Decl. ¶¶ 24-25.)

  In a conversation between UC 1277 and Mirkin on May 16, 2000, UC 1277 requested that Mirkin provide evidence that the Nike Undercover Goods were in fact authentic. (See Ex. 5, Conversation Tr., May 16, 2000, at 2-4.) Mirkin told UC 1277 that the goods were coming from Foot Locker and that, while Nike would not provide proof of authenticity, Mirkin would fax over a Foot Locker document showing that the goods were authentic. (See id.) Mirkin's statement that the goods were from Foot Locker contradicted an earlier statement that the goods were bought from Nike. (See Ex. 5, Conversation Tr., April 25, 2000, at 2.) In a later conversation, after having failed to fax over documentary proof of authenticity from Foot Locker, Mirkin urged UC 1277 to not seek proof of authenticity, to just "let it go" and not deal with the customer who wanted proof of authenticity. (See Ex. 5, Conversation Tr., May 25, 2000, at 3-4.) Mirkin explained that, to provide proof of authenticity, he would have to call Nike and it was difficult dealing with Nike. (See id. at 3.) Mirkin's explanation that it was difficult dealing with Nike appeared to contradict a previous statement about Mirkin receiving "the choice stuff out of Nike because we pay them upfront." (See Ex. 5, Conversation Tr., Feb. 17, 2000, at 2.) In any event, almost all of the Undercover Goods were determined to be counterfeit. (See M&D Stmt. ¶ 10.) On June 21, 2000, OCID executed search warrants issued by New York Supreme Court Justice Laura Safer-Espinoza at nearly a dozen locations around New York City, including M&D's premises at the Brooklyn Navy Yard. (See id. ¶¶ 13-14.) Mirkin and Dalia Wallach were arrested on that day and charged with the offense of Trademark Counterfeiting in the Second Degree in violation of New York Penal Law § 165.72. (See id. ¶¶ 16, 19.)

  On or about June 23, 2000, the Bronx District Attorney commenced a civil forfeiture action against Dalia Wallach, Mirkin, M&D and MGM. (See id. ¶ 27.) That same day, the Bronx District Attorney obtained an order of attachment, a temporary restraining order and a preliminary injunction ("PI") against the assets of Dalia Wallach, Mirkin, M&D and MGM in which, among other things, approximately $172,000 held in bank accounts in Mirkin's name was frozen. (See id. ¶ 28.)

  On November 16, 2000, MGM pleaded guilty to the offense of Trademark Counterfeiting in the Third Degree for the Undercover Goods and other goods seized in the June 21, 2000, raid. (See Transcript, attached as Ex. 21 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562.) That same day, Mirkin and MGM agreed to forfeit the approximately $172,000 frozen by the PI and the forfeiture action was dismissed with prejudice as to all the parties. (See Settlement Agreement and Stipulation, attached as Exs. 22 and 24 of City Defs.' Exs. in Supp. of Cross-Mot. for Summ. J. in Case No. 02 Civ. 1562.) On the previous day, November 15, 2000, the criminal charges against Dalia Wallach and Mirkin were dismissed without prejudice pursuant to Criminal Procedure Law Article 170. (See M&D Stmt. ¶ 30; Tommy Hilfiger Licensing, Inc. v. Bradlees, Inc., No. 99 Civ. 4677 (WK), 2002 WL 737477, at *4 (S.D.N.Y. Apr. 25, 2002).) DISCUSSION

  Summary judgment shall be granted if "there is no issue as to any material fact" and the moving party is entitled to a judgment in its favor as a matter of law. Fed.R. Civ. P. 56(c). Although it is the moving party's burden to show that there is no issue as to any material fact and that they are entitled to judgment as a matter of law, when a motion for summary judgment is made and properly supported, "an adverse party may not rest upon the mere allegations or denials" of the movant's pleading, "but must set forth specific facts showing that there is a genuine issue for trial." Fed.R. Civ. P. 56(e). All ambiguities and all "inferences to be drawn from the underlying facts revealed in materials such as affidavits, exhibits, interrogatory answers, and depositions must be viewed in the light most favorable to the party opposing the motion" for summary judgment. Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d Cir. 1994). However, in order to defeat a motion for summary judgment, the evidence must be such that, when viewed in the light most favorable to the party opposing the motion, "a reasonable juror could return a verdict" in favor of the non-movant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Indeed, summary judgment is "mandated" when "the evidence is insufficient to support the non-moving party's case." Distasio v. Perkin Elmer Corp., 157 F.3d 55, 61 (2d Cir. 1998). Summary judgment may also be granted when the opposing party fails to establish an element essential to that party's case and on which that party would bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 321 (1986).

  To establish a tort claim for malicious prosecution under New York law, M&D must show that (a) a proceeding was initiated against it; (b) the proceeding terminated in M&D's favor; (c) there was no probable cause for initiating the proceeding; and (d) the proceeding was in fact initiated out of malice. See Murphy v. Lynn, 118 F.3d 938, 947 (2d Cir. 1997). Assuming that new evidence does not surface after a party is arrested and before a proceeding is initiated against that party, a claim for malicious prosecution fails with a finding of probable cause to arrest the party. See Otero v. Town of Southampton, 194 F. Supp. 2d 167, 178 (E.D.N.Y. 2002); see also Golub v. City of New York, 03 Civ. 0239 (SHS), 2004 WL 1846344, at *6 (S.D.N.Y. Aug. 18, 2004). "In general, probable cause to arrest exists when the officers have knowledge or reasonably trustworthy information of facts and circumstances that are sufficient to warrant a person of reasonable caution in the belief that the person to be arrested has committed or is committing a crime." Weyant v. Okst, 101 F.3d 845, 852 (2d Cir. 1996). Probable cause may be determined as a matter of law if there is no dispute as to the pertinent events and the facts available to the officer at the time of arrest. See Id.; Caldarola v. Calabrese, 298 F.3d 156, 162 (2d Cir. 2002).

  Defendants do not argue that the Undercover Goods purchased by UC 1277 on four occasions, and determined by the Tradmark Holders' examiners to be counterfeit, were in fact authentic. Rather, Defendants argue that there is a "total lack of bona fide evidence that [Dalia] Wallach or M&D knew that any of their goods were purportedly counterfeit at the time the [Trademark Holders] initiated the criminal investigation of M&D in 1999 or at the time of [Dalia] Wallach's June 21, 2000 arrest." (Opp'n at 14.) Defendants further argue that they have "set forth in extraordinary detail, with reference to extensive deposition testimony of Teddy and Dalia Wallach and Mirkin, why none of M&D, [Dalia] Wallach or Mirkin ever suspected that M&D's merchandise was counterfeit."*fn6 (Id. at 14-15.) The Court is not persuaded by these arguments.

  As a preliminary matter, and ignoring for the moment the guilty plea of Dalia Wallach's sales agent, MGM, the Court notes that whether Defendants in fact knew or suspected that M&D's merchandise was counterfeit is a different issue from whether there was probable cause to arrest and initiate proceedings against Defendants. What Defendants in fact knew or suspected would be a matter for a trial on the criminal charges or in the forfeiture proceeding. On the present motion, however, the pertinent inquiry is whether there are material issues of fact regarding the evidence developed by the police at the time of the arrest and, if not, whether the undisputed facts establish the existence or lack of probable cause at that time. See Weyant, 101 F.3d at 852; accord Caldarola, 298 F.3d at 162.

  There is no dispute among the parties as to what facts were available to the police at the time of the arrest and initiation of the criminal and forfeiture proceedings. Prior to seeking a search warrant for M&D, arresting Dalia Wallach, or initiating proceedings against Defendants, OCID knew that three different Trademark Holders determined that almost all of the Undercover Goods bought on four separate occasions over the course of six months to be counterfeit.*fn7 While not sufficient to establish knowledge, the consistently counterfeit nature of the goods purchased is some indication that Defendants were not acting innocently. Thereafter, UC 1277, aware that M&D's goods had been found to be counterfeit, attempted to procure a certificate of authenticity from Mirkin with respect to certain of M&D's goods. Mirkin's failure to produce a certificate, and his evasive answers when pressed to do so, would lead a reasonable person to conclude that Mirkin was aware that the goods he had sold to UC 1277 in fact were not authentic.

  Defendants argue, however, that UC 1277's conversations with Mirkin do not establish Dalia Wallach or M&D's participation in a scheme to sell counterfeit goods and that UC 1277's conversations with Dalia Wallach do not evidence guilty knowledge on her part. However, the investigating authorities are not required to compartmentalize evidence regarding suspected participants in a single enterprise. Taken as a whole, the recorded conversations between UC 1277 and Mirkin, Dalia Wallach and Teddy Wallach provide a reasonable basis for OCID to conclude that Mirkin, Dalia Wallach, and Teddy Wallach were part of a single enterprise engaged in the sale of counterfeit goods. This conclusion is supported by the facts that (a) Mirkin's business card showed him to act on behalf of "MGM/M&D", (b) both Mirkin and Dalia Wallach were directly involved in completing transactions for the purchase of goods by UC 1277; (c) employees of M&D referred to MGM as M&D's office or showroom in Manhattan; and (d) employees of MGM referred to M&D as MGM's warehouse. While Defendants cling to the argument that Mirkin was an "independent sales agent" and that his acts and knowledge raise no inference as to Dalia Wallach's culpability, it is undisputed that Mirkin worked as an agent for M&D in an important capacity whether or not he was "independent." Furthermore, since Dalia Wallach is the President and sole shareholder of M&D, it is not unreasonable to conclude that Wallach was probably the alter ego of M&D. Indeed, it would be unreasonable to conclude that the president and sole shareholder of a small, closely held and managed business was unaware of what was going on in the enterprise that she controlled. Thus, it was reasonable for OCID to conclude that Dalia Wallach and M&D possessed the requisite knowledge that the goods they were selling were counterfeit. For these reasons, the Court concludes that, as a matter of law, there was probable cause to arrest Dalia Wallach and, in turn, to initiate forfeiture proceedings against her and her company.*fn8 CONCLUSION

  For the reasons stated above, Plaintiffs' Motion for Summary Judgment against the malicious prosecution counterclaims of Defendants is GRANTED.

  SO ORDERED.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.