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Boneta v. Rolex Watch USA, Inc.

United States District Court, S.D. New York

February 3, 2017

ERIK BONETA Plaintiff,
v.
ROLEX WATCH USA, INC. et al., Defendants.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, District Judge

         This case arises from Plaintiff Erik Boneta's allegations that Defendants Rolex Watch USA, Inc. ("Rolex USA"); Rolex Industries, Inc. ("Rolex Industries"); Montres Rolex, S.A. ("Montres Rolex") and Rolex Holdings, S. A. ("Rolex Holdings") violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Sherman Antitrust Act and the Clayton Antitrust Act by deliberately and unlawfully permitting United States Custom and Border Protection ("CBP") officials to detain genuine Rolex watches imported into the United States from overseas. Defendants Rolex USA and Rolex Industries (collectively, "Defendants") move to dismiss Plaintiffs Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, Defendants' motion is granted.

         I. BACKGROUND

         For purposes of this motion, "all factual allegations in the complaint are accepted as true and all inferences are drawn in the plaintiffs favor." Littlejohn v. City of New York, 795 F.3d 297, 306 (2d Cir. 2015).

         Pursuant to the Tariff Act of 1930 and accompanying regulations, CBP offers gray market protection to certain American-owned trademarks and trade names. When a trademark is entitled to gray market protection, CBP will prohibit the importation of a foreign-made item bearing a genuine trademark that is identical to or substantially indistinguishable from the American-owned trademark. An American-owned trademark is entitled to gray market protection where (1) the American and foreign trademarks are not owned by the same person, (2) the trademarks are not subject to common ownership or control and (3) the owner of the American trademark records it with the federal government. See 19 U.S.C. § 1526(a); 19 C.F.R. § 133.23.

         At some point prior to May 20, 2009, Defendant Rolex USA recorded its trademark with CBP, indicating that it was entitled to gray market protection. As a result of this recordation, Rolex USA effectively received the exclusive right to import Rolex watches into the United States. CBP published notice of that gray market protection on an agency website, http://iprs.cbp.gov, from 2009 to 2015. Among other things, the agency website displayed a screen with information stating "Gray Market Restricted YES" as to Rolex products. However, by 2006, Rolex USA had merged with all other Rolex entities, such that Rolex USA and the three other Defendants were under common ownership and Defendants knew that the U.S. trademark was no longer entitled to gray market protection.

         Rolex USA never informed CBP about the merger. Instead, Rolex USA deliberately allowed CBP to enforce its gray market protection in order to decrease its competition in the United States. Defendants did so by requiring importers to obtain authorization to import Rolex watches, and communicating these authorizations "through email and postal services." Relying on its gray market protection, Rolex USA consistently prohibited Plaintiff and numerous other watch importers from bringing shipments of Rolex watches into the United States.

         On May 20, 2009, CBP officials detained a shipment of 90 Rolex watches that Plaintiff sought to import from Hong Kong. The same day, CBP officials contacted Rolex USA "via wire and/or mail" and "counsel for Rolex" confirmed that the watches were genuine, but advised that the shipments were not accompanied by authorization from Rolex USA, the trademark holder. Consequently, the watches were seized.

         On or about May 22, 2009 a Special Agent with Immigration and Customs Enforcement, Brian Ferrante, "contacted counsel for" Rolex USA who confirmed that Plaintiff was not authorized to import Rolex watches, without disclosing that authorization was unnecessary. As a result, a search warrant was sought for the purpose of finding and seizing more Rolex watches.

         CBP eventually seized $1.9 million worth of Rolex watches legally purchased by Plaintiff. Although Plaintiff believed that Rolex USA was not entitled to gray market protection in 2009, he settled the case against him by the United States Attorney's Office after being told by CBP, his attorney and the United States Attorney's Office that Rolex USA was entitled to gray market protection.

         In 2015, Rolex USA let its gray market protection lapse when it failed to apply to CBP for an extension. Rolex USA's decision not to seek further gray market protection confirmed Plaintiffs suspicions that Rolex USA had not been entitled to gray market protection since the merger in or around 2006, despite Rolex USA's representations to CBP.

         Rolex USA is or was a corporate subsidiary of Defendants Rolex Industries and Montres Rolex. Defendant Rolex Holdings may be the owner of one or more of the other Defendants. The Complaint contains no specific allegations regarding any Defendant except Rolex USA. Rolex Montres and Rolex Holdings are Swiss corporations and have not been served, nor have they appeared in this action.

         II. LEGAL STANDARD

         On a motion to dismiss for failure to state a claim, "the only facts to be considered are those alleged in the complaint, and the court must accept them, drawing all reasonable inferences in the plaintiffs favor, in deciding whether the complaint alleges sufficient facts to survive." Doe v. Columbia Univ.,831 F.3d 46, 48 (2d Cir. 2016); accord Littlejohn, 795 F.3d at 306. To withstand dismissal, a pleading "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal,556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly,550 U.S. 544, 570 ...


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