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Gucci America, Inc. v. Bagsmerchant

September 27, 2012

GUCCI AMERICA, INC.; BALENCIAGA, S.A.; BALENCIAGA AMERICA, INC.; BOTTEGA VENETA, INC.; AND YVES SAINT LAURENT AMERICA, INC., PLAINTIFFS,
v.
BAGSMERCHANT, LLC; BAGSMERCHANT.CO; BAG STORE LTD A/K/A WWW.BAGS-STORE.COM; YUNJING LLC; AUTHENTICTRADING LTD; YI WANG; WU XIANHUI; YU ZHANG; JASON JAMES A/K/A JASON MIOTO A/K/A JERMEN MIOTO; WWW.BAGSDEAL.COM; ALL DOING BUSINESS AS WWW.BAGSMERCHANT.COM; ABC COMPANIES; AND JOHN DOES, DEFENDANTS.



The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION

Non-parties China Merchants Bank ("CMB") and Bank of China ("BOC," and collectively, the "Banks") have moved pursuant to Federal Rules of Civil Procedure 59(e), 60(b), and 24(a) and New York Civil Practice Law and Rules ("CPLR") section 5240 to modify or set aside the July 11, 2011 default judgment (the "Default Judgment") entered against defendants "insofar as the judgment directs non-party foreign banks including CMB and BOC to turn over any property of the defaulting Defendants that those banks may hold abroad."*fn1

Plaintiffs oppose the motion on the grounds that: (1) the motion is untimely; (2) the Banks lack standing to alter or amend the judgment; and (3) a court sitting in New York has authority to direct a bank over which it has personal jurisdiction to bring assets into New York to satisfy a judgment.*fn2 The Banks' motion is grantedin part.

II. BACKGROUND

Plaintiffs brought suit on April 5, 2010, alleging that defendants sold counterfeit versions of plaintiffs' products on web sites, in violation of U.S. trademark laws. On April 12, 2010, Judge Deborah Batts granted plaintiffs' request for an ex parte temporary restraining order ("TRO") directing defendants to refrain from various infringing acts and restraining "Defendants and . . . any banks, . . . from transferring, disposing of, or secreting any money . . . or other assets of Defendants or otherwise paying or transferring any money . . . or other assets to any of the Defendants, or into or out of any accounts associated with or utilized by any of the Defendants."*fn3 On April 27, 2010, Judge Batts extended the terms of the TRO (the "TRO Extension Order").*fn4 On May 5, 2010, plaintiffs delivered the TRO and TRO Extension Order to CMB's New York branch ("CMBNY") with a letter informing CMB that it was required to restrain all accounts used by defendants.*fn5

On May 23, 2010, Judge Batts issued a Preliminary Injunction ("PI") containing a nearly identical asset restraint provision to that contained in the TRO and TRO Extension Order.*fn6 Plaintiffs served BOC with the PI and a Rule 45 subpoena at their New York branch ("BOCNY") on October 19, 2010*fn7 and served CMBNY with the PI and a Rule 45 subpoena on October 21, 2010.*fn8 The Banks each served objections and responses to the Rule 45 subpoenas and notified plaintiffs that they had found no responsive documents in their New York branches.*fn9 Plaintiffs did not move to compel or otherwise challenge the responses.*fn10

On July 8, 2011, Judge Batts entered a Default Judgment against defendants, which included a permanent injunction, equitable accounting and statutory damages of $7.8 million.*fn11 The Default Judgment provided:

That, in accordance with Rule 64 of the Federal Rules of Civil Procedure, 15 U.S.C. § 1116(a), Article 52 of New York State's Civil Practice Law and Rules, and this Court's inherent equitable power to issue remedies ancillary to its authority to provide final relief, all Defendants' Asset Holders . . . who receive notice of this order by personal service or otherwise are ordered to liquidate . . . and pay the value of such Defendants' Assets to Plaintiffs . . . regardless of whether the Defendants' Assets are located in the United States or abroad.*fn12

On August 8, 2011, the Banks moved to modify or set aside the Default Judgment "insofar as the judgment directs non-party foreign banks including CMB and BOC to turn over any property of the defaulting Defendants that those banks may hold abroad."*fn13 The case was transferred to this Court on September 11, 2012.*fn14

III. APPLICABLE LAW

A. Section 5240 of the CPLR*fn15

Section 5240, made applicable to this federal action pursuant to Federal Rule of Civil Procedure 69, provides that "the court may at any time, on its own initiative or the motion of any interested person, and upon such notice as it may require, make an order denying, limiting, conditioning, ...


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