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A&A JEWELLERS LIMITED v. BOGARZ

United States District Court, W.D. New York


October 21, 2004.

A&A JEWELLERS LIMITED and A&A JEWELERS, INC., Plaintiffs,
v.
BOGARZ, INC., Defendant.

The opinion of the court was delivered by: JOHN T. ELFVIN, Senior District Judge

MEMORANDUM and ORDER*fn1

Plaintiffs A & A Jewellers Limited and A & A Jewelers, Inc. (collectively plaintiffs) commenced this action on March 25, 2004 against defendant Bogarz, Inc. seeking a judgment declaring that plaintiffs are not infringing any of defendant's copyright rights by selling the fourteen allegedly infringing jewelry products. Defendant subsequently filed an April 12, 2004 complaint in the United States District Court for the Central District of California ("the California action") against plaintiffs for copyright and trade dress infringement and unfair competition on those same fourteen allegedly infringing jewelry products.*fn2 See Bogarz, Inc. v. A & A Jewellers Ltd., Case No. 04-CV-2554-PA(CWx). Defendant then on April 16, 2004 filed in this Court a Motion to Dismiss Anticipatory Declaratory Judgment Action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("FRCvP") on the ground that plaintiffs filed "an anticipatory declaratory judgment action designed to deprive [defendant] of its right to litigate its affirmative action in a forum of its choosing". (Def.'s Mem. Supp. Mot. Dismiss at 5.) Plaintiffs moved for Preliminary Injunction ("PI") on April 20, 2004 seeking to enjoin defendant from prosecuting the California action. This Court's May 14, 2004 Order granted plaintiffs' PI, holding that defendant had not shown that plaintiffs had filed this action in order to win a "race to the courthouse" and the balance of conveniences weighed in favor of litigating this action in this forum. This Court will now address defendant's Motion to Dismiss and, for the reasons set forth below, defendant's Motion will be denied.

While familiarity with the facts is presumed, specific facts will be discussed as needed.*fn3 Plaintiffs manufacture, market and distribute jewelry items. Defendant is a designer and manufacturer of jewelry. Defendant's counsel sent a letter on March 12, 2004 to plaintiffs alleging that they had infringed defendant's copyrights by manufacturing unauthorized reproductions of fourteen jewelry items and by selling them through Friedman's, Inc., a large retailer of jewelry. Defendant requested that plaintiffs immediately cease and desist selling the allegedly infringing jewelry and further stated that defendants will initiate legal action if plaintiffs fail to comply with such demands by March 18, 2004. Plaintiffs' counsel responded with a March 18 letter requesting that defendant provide plaintiffs with samples of the fourteen items at issue and their respective copyright certificates. Plaintiffs allege that they never received the requested samples and defendant claims said samples were sent. This Court's May 14, 2004 Order found that defendant did not put forth evidence to discredit plaintiffs' assertion that they never received the requested samples. May 14, 2004 Memorandum & Order of this Court, at 6 n. 11. Following non-receipt of the requested samples and passage of defendant's deadline via the demand letter, plaintiffs commenced this action. Eighteen days later, defendant filed the California action, after which plaintiffs moved for and the Court granted PI enjoining defendant from prosecuting the California action. Before this Court is defendant's Motion to Dismiss this action pursuant to FRCvP 12(b)(6) on essentially the same grounds that this Court granted plaintiffs' PI.*fn4 As such, on the same rationale as the Order granting PI, this Court must deny defendant's Motion.

  FRCvP 12(b)(6) entitles a defendant to a judgment of dismissal where a complaint fails to state a claim upon which relief can be granted. The standard of review on a motion to dismiss is heavily weighted in favor of a plaintiff. The Court is required to read a complaint generously, accepting the material facts alleged in the complaint as true and drawing all reasonable inferences from the complainant's allegations. California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 515 (1972); Frasier v. Gen. Elec. Co., 930 F.2d 1004, 1007 (2d Cir. 1991). A defendant is entitled to dismissal pursuant to FRCvP 12(b)(6) only when the Court finds that "it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

  The Declaratory Judgment Act ("DJA") provides that a court "may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a) (2004) (emphasis added). The Supreme Court has held that the district court is "under no compulsion to exercise" the jurisdiction it has under the DJA. Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 494 (1942). "The Court must look at the litigation situation as a whole in determining whether it is appropriate for the Court to exercise its jurisdiction over the declaratory judgment action before it." Great Am. Ins. Co. v. Houston Gen. Ins. Co., 735 F. Supp. 581, 585 (S.D.N.Y. 1990). Considering the litigation situation as a whole, in light of the Court's May 14, 2004 Order granting plaintiffs' PI and the principles of equity, the Court concludes that it should exercise its discretion to entertain plaintiffs' action for a declaratory judgment. Accordingly, defendant's Motion to Dismiss will be denied.

  Defendant, in support of its Motion to Dismiss, argues that plaintiffs' misuse of the DJA to gain a procedural advantage and to forum shop warrants dismissal. Defendant, in opposition to plaintiffs' Motion for PI, argued that the "first-filed rule" did not apply in this case because plaintiffs' present action, merely designed to preemptively deprive defendant of its right to choose its own forum, constitutes a misuse of the DJA.*fn5 In the May 14 Order, this Court held that plaintiffs filed this declaratory action to protect their rights and defendant had not shown that plaintiffs intentionally deceived defendant so that plaintiffs could file first in this district.*fn6 May 14, 2004 Memorandum & Order of this Court, at 7.

  Further, defendant contends in favor of its Motion to Dismiss, just as it did in opposition to plaintiffs' Motion for PI, that significant factors militate in favor of dismissal of this case*fn7 — viz, (1) Friedman is indispensable to the resolution of this action and this Court has no jurisdiction over Friedman while the California Court does, (2) most if not all of the documents and witnesses relevant to this action are located in California and (3) the principles of judicial economy and preservation of resources favor dismissal. This Court, however, in granting plaintiffs' PI, held against defendant on all three of those claims and found that the balance of conveniences and the interests of justice weigh in favor of the injunction and in favor of litigating in this forum.*fn8

  Therefore, there is nothing further for this Court to determine. Defendant's Motion to Dismiss makes the same arguments as were rejected in the Court's May 14, 2004 Order enjoining defendant from prosecuting the California action. As such, this Court holds this is the correct forum for this action and defendant's Motion to Dismiss plaintiffs' declaratory judgment action pursuant to FRCvP 12(b)(6) will be denied.

  Accordingly, it is hereby ORDERED that defendant's Motion to Dismiss plaintiffs' declaratory judgment action is denied and that this action will continue in this forum.


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