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Gessler v. Destylarnia

July 16, 2010

ALTVATER GESSLER -- J.A. BACZEWSKI INTERNATIONAL (USA) INC., AND ALTVATER GESSLER -- J.A. BACZEWSKI GMBH PLAINTIFFS
v.
SOBIESKI DESTYLARNIA S.A., ADAMBA IMPORTS INTERNATIONAL, INC., INTERNET WINES & SPIRITS, INC., AND DOES 1-20, DEFENDANTS.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., United States District Judge

OPINION & ORDER

Plaintiffs Altvater Gessler-J.A. Baczewski International (USA) Inc. ("Gessler USA") and Altvater Gessler-J.A. Baczewski GmbH ("Gessler GmbH") (collectively, "Gessler") are closely held corporations owned by members of the Gessler family. Gessler, which manufactures and sells alcoholic beverages, is the corporate continuation of two businesses that have been in existence since the 18th Century. One of the products that Gessler makes is a honey liqueur known as "krupnik," which is manufactured using a secret family recipe that dates back over a hundred years. Gessler registered the word "KRUPNIK" as a trademark with the Austrian Patent Office in 1960, and has manufactured krupnik in the United States and elsewhere in the world since the early 1960s. During the 1990s, Gessler USA entered into two written agreements with a Polish company, Polmos, authorizing it to produce krupnik using the secret Gessler family recipe.

Thereafter, in 2003, Defendant Sobieski-Destylarnia S.A. ("Sobieski"), a Polish corporation, acquired rights in Polmos. At that time, according to Gessler, Sobieski gained unauthorized access to Gessler's secret recipe for krupnik. Gessler alleges that in January 2006, it discovered advertisements on Sobieski's website that "trad[e] upon the goodwill, trade name, trademark, and historic reputation" of Gessler and refer to Gessler's historic Baczewski Distillery. The advertisements allegedly claimed that Sobieski's krupnik was made using Gessler's secret recipe. Gessler then discovered that Sobieski was importing its krupnik into the United States through an alleged agent, Defendant Adamba Imports International, Inc. ("Adamba") which has offices located in Brooklyn, New York.

Gessler commenced this action on August 28, 2006, and filed its Amended Complaint on November 1, 2006. It named as defendants Sobieski and Adamba, as well as Internet Wines & Spirits, Inc., an Illinois corporation that sells alcoholic beverages in the U.S., and John Does 1-20, whom Gessler asserts are individuals and entities "behind the wrongful acts of Defendants." Am. Cplt. ¶ 8. The Complaint seeks damages for (1) violations of section 43 of the Lanham Act, 15 U.S.C § 1125; (2) common law trademark infringement; (3) deceptive trade practices pursuant to N.Y. Gen Bus. L. § 349; and (4) unjust enrichment; Gessler also seeks declaratory relief.

Sobieski moved to dismiss for improper venue, arguing that Gessler was bound by the forum selection clauses contained in the licensing agreements between Gessler USA and Polmos. On May 3, 2007, this Court granted Sobieski's motion and dismissed the case. Gessler appealed. On appeal, the Second Circuit reversed, based on a case that was issued after this Court had rendered its decision. See Altvater Gessler-J.A. Baczewski International (USA) Inc. v. Sobieski Destylarnia S.A., 572 F.3d 86, 89 (2d Cir. 2009) (citing Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007)). The Second Circuit found that dismissal was improper because the forum selection clauses relied upon by Sobieski did not cover the subject matter of Gessler's claims in this litigation.

Id. at 90. Although Poland was designated as the venue for all claims "resulting from" the licensing agreements, the Second Circuit held that Gessler's claims were not covered because they did not sound in contract and therefore did not "result[] from" the licensing agreements. Id. at 91. Sobieski urged the Second Circuit to affirm this Court's dismissal on the alternative grounds of lack of personal jurisdiction or failure to effect service of process, but the Second Circuit decided that in light of the limited record on appeal, those issues were best addressed by this Court. Id. A further recitation of the facts of this case is provided in the Second Circuit's opinion. See id. at 88-89.

Upon remand, Defendant Adamba filed an amended answer to the Complaint and asserted cross-claims against Sobieski. Sobieski renewed its original motion to dismiss the Complaint, and moved to dismiss the cross-claims, on two grounds: (1) lack of personal jurisdiction and (2) failure to effect service of process. After the motion was filed, but before it was fully-briefed, this Court granted Gessler's request to take jurisdictional discovery, after which the parties submitted supplemental briefs setting forth their findings on the jurisdictional arguments. For the reasons set forth below, Sobieski's motion to dismiss is denied.

I. DISCUSSION

A.Service of Process

"Before a federal court may exercise personal jurisdiction over a defendant, the procedural requirement of a service of summons must be satisfied." Dynegy Midstream Serv., LP v. Trammochem, 451 F.3d 89, 94 (2d Cir. 2005) (quoting Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987)). Thus, as a threshold matter, I must resolve the question of whether Gessler has effected proper service upon Sobieski. Sobieski offers three reasons why Gessler's service of process was insufficient: (1) service was attempted upon the wrong entity; (2) service was attempted via mail; and (3) the necessary proof of service was not filed with this Court.

Gessler has made several attempts to perfect service upon Sobieski. On November 10, 2009, Gessler filed a certificate of service showing that service was accomplished on December 12, 2006 upon Sobieski Destylarnia S.A. at "ul. Bellottiego 1," in Warsaw.*fn1 The certificate states that service was effected in accordance with one of the methods authorized by Article 5(b) of the Hague Convention, and specifies that service occurred "via the post office with the acknowledgment of receipt." A form entitled "Acknowledgement of Receipt" was appended to the certificate, in both the Polish original and the English translation. The form specifies that correspondence from a District Court in the United States, bearing docket number 06 CV 6510, was delivered by certified mail "to the person authorized to accept the correspondence." In the box marked "sender," the form bears a stamp for the Warsaw District Court; in the space for the recipient, the stamp reads "Sobieski" in large letters and provides an address of ul. Bellottiego 1; it is signed and dated Dec. 12, 2006.

In its moving papers, Sobieski argues that service upon Sobieski Spolka z.o.o., the entity served in December 2006 in Warsaw, is insufficient to impute service upon Defendant Sobieski Destylarnia, which is located in Starogard Gdansk. Although Gessler contends in its briefs that the two entities are so closely related that service in Warsaw was sufficient, it recently filed a second certificate of service, reflecting service of the summons and complaint on March 16, 2010, upon Destylarnia Sobieski SA.*fn2 This time, Gessler requested personal, in-hand service, which was accomplished when the documents were delivered by hand to Dawid Bozenski at Destylarnia Sobieski SA, ul. Skarszewska 1, 83-200 Starogard Gdanski. The certificate of service was stamped and signed by the President of the District Court in Starogard Gdansk. This is precisely the manner and place of service that Sobieski argues Gessler should have used at the commencement of the action.*fn3 See Def's Supp. Br. Jurisdiction 3-4.

The remaining question is whether service was proper in light of the long delay between the filing of the Complaint in August 2006 and effective service of process upon Sobieski in Starogard Gdansk in March 2010. Federal Rule of Civil Procedure Rule 4(m) exempts service in foreign countries from the general 120-day time limit for serving a summons and complaint. The Second Circuit holds that the exception is inapplicable only "where party did not attempt service within the 120-day time limit and 'ha[d] not exactly bent over backward to effect service.'" Paraguay Humanitarian Foundation, Inc. v. Banco Central Del Paraguay, 2010 WL 567336 (2d Cir. 2010) (quoting Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737, 740 (2d Cir. 1985)). In Paraguay Humanitarian, the Second Circuit ruled that a district court did not abuse its discretion to dismiss a complaint where, after two and a half years, there had been no attempt to effect service, and no explanation was offered as to why service had not occurred. Id. Here, by contrast, Gessler attempted service by serving the Sobieski entity in Warsaw on December 12, 2006, which is within the 120-day period after the filing of the Complaint required by Rule 4(m). Counsel for Sobieski entered their appearance the next month, indicating that Sobieski received notice of the action. Although service may not have been perfected until Sobieski Destylarnia was served in Starogard Gdansk, it is clear that from the start: (1) Gessler showed diligence ...


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