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Tiffany (Nj) LLC and Tiffany v. Qi andrew

November 7, 2012


The opinion of the court was delivered by: Pitman, United States Magistrate Judge:


I. Introduction

By letter dated September 20, 2012, plaintiffs renew an application they made last year to enforce subpoenas that they served on the New York branches of three Chinese banks. For the reasons set forth below, plaintiffs' motion is denied.*fn1

II. Facts*fn2

This is a trademark counterfeiting case in which plaintiffs allege that defendants sold counterfeit Tiffany products through several websites hosted in the United States. Plaintiffs claim that defendants accepted payment in U.S. dollars, used PayPal, Inc. ("PayPal") to process customers' credit card transactions, then transferred the sales proceeds to accounts held by the Bank of China ("BOC"), Industrial and Commercial Bank of China ("ICBC") and China Merchants Bank ("CMB") (collectively the "Banks").

After defendants defaulted, plaintiffs sought discovery last year from the Banks by serving subpoenas seeking the identities of the holders of the accounts into which the proceeds of defendants' sales were transferred and the subsequent disposition of those proceeds. The Banks all maintained branch offices in the Southern District of New York, and plaintiffs served their subpoenas on those branches seeking the information.

The Banks responded to the subpoenas by advising that the documents plaintiffs sought were all maintained in China and that the respective New York branches of the Banks lacked the ability to access the requested information. The Banks further advised that China's internal laws prohibited the disclosure of the information except under certain conditions. The Banks proposed that the plaintiffs pursue the requested discovery pursuant to the Hague Convention.

After receiving the parties' briefs and hearing oral argument, I issued an Opinion and Order dated July 25, 2011 in which I performed the comity analysis suggested in Section 442(1)(c) of the Restatement (Third) of Foreign Relations Law and concluded that plaintiffs should pursue discovery through the Hague Convention in the first instance. Tiffany (NJ) LLC v. Qi Andrew, supra, 276 F.R.D. at 151-61. However, my Opinion and Order concluded that, in the event the Hague Convention process proved futile, plaintiffs could renew their application to enforce the subpoenas served on the Banks' New York branches. Judge Pauley subsequently affirmed my July 25, 2011 Order. Tiffany (NJ) LLC v. Qi Andrew, 10 Civ. 9471 (WHP)(HBP) (Docket Item 50) (S.D.N.Y. November 14, 2011).

In November, 2011, plaintiffs submitted their Hague Convention application to China's Central Authority, and on or about August 7, 2011, the Ministry of Justice of the People's Republic of China ("MOJ") responded to the Hague Convention request and produced some of the documents requested. With respect to each of the Banks, the MOJ produced account opening documents (including the government identification card of the account holder), written confirmation of certain transfers into the accounts and a list of transfers out of the accounts. With respect to CMB, the records indicate that all funds in the account were withdrawn through cash transactions at either an ATM or through a teller. BOC and CMB each produced documents concerning a single account; ICBC produced documents for three accounts.

In its cover letter, the MOJ expressly noted that it was not producing all documents requested. Specifically, it noted (Letter to the Undersigned from the International Legal Cooperation Center, Ministry of Justice, People's Republic of China, dated August 7, 2012).*fn3

Plaintiffs claim that the MOJ's production is deficient and that I should now grant its application to enforce the subpoenas previously served on the New York branches of the Banks. Specifically, plaintiffs claims that the MOJ's response is deficient because (1) it does not state whether any of the defendants have any additional accounts at the Banks; (2) the MOJ did not produce detailed wire transfer records concerning the deposits into and withdrawals from the CMB and ICBC accounts, and (3) the MOJ did not produce documents concerning the Banks' efforts to comply with the preliminary injunction issued by Judge Pauley on January 3, 2011.

III. Analysis

The principal issue to be resolved is whether the Banks' production through the MOJ has been so limited that resort to the Hague Convention process can be characterized as futile. Although the Banks' document production has been more limited than it would have been under the Federal Rules of Civil Procedure, I cannot conclude that it is so limited that the process has been futile.

Initially, I note that the centerpiece of plaintiffs' futility argument last year was the argument that the People's Republic of China would either not respond at all to a request pursuant to the Hague Convention or would take an inordinate amount of time to do so. Experience has now proven both arguments to be unfounded. The Banks, through the MOJ, have unquestionably produced relevant, responsive documents. In addition, although the MOJ took approximately nine months to respond to the Hague Convention request, this period is not inordinately long given the delays inherent in international discovery proceedings. Although I am not aware of any statistical compilations, based on my experience as a Magistrate Judge, China's nine-month ...

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