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Boneta v. Rolex Watch U.S A. Inc.

United States District Court, S.D. New York

June 21, 2017

ERIK BONETA, Plaintiff,
v.
ROLEX WATCH U.S A. INC., Defendants.

          OPINION AND ORDER

          LORNA G. SCHOFIELD, District Judge.

         Plaintiff Erik Boneta brings this action against Defendant Rolex Watch U.S.A., Inc. ("Rolex USA"), alleging that Rolex USA 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. Plaintiff's First Amended Complaint was dismissed in its entirety for failure to state a claim. See Boneta v. Rolex Watch USA, Inc., __ F.Supp.3d __, No. 16 Civ. 2369, 2017 WL 481450, at *1 (S.D.N.Y. Feb. 3, 2017). Plaintiff moves for leave to file a Second Amended Complaint (the "SAC") pursuant to Federal Rule of Civil Procedure 15(a)(2). For the following reasons, Plaintiff's motion is denied.

         I. BACKGROUND

         Familiarity with the procedural history and the allegations contained in the First Amended Complaint is assumed. See Boneta, 2017 WL 481450, at *l-2. The following is based on the SAC, and all factual allegations are assumed to be true for purposes of this motion. See Trs. of Upstate N.Y. Eng'rs Pension Fund v. Ivy Asset Mgmt, 843 F.3d 561, 566 (2d Cir. 2016).

         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.

         By letter dated February 8, 2005, Defendant Rolex USA renewed the recordation of its trademark with CBP, indicating that it was entitled to gray market protection. A CBP official confirmed renewal of Rolex USA's trademark in a letter dated June 30, 2005. The letter noted that "it is the recordant's responsibility to promptly advise [CBP] of any material changes made to recordations, including . . . changes in ownership or control." The same CBP official sent a letter dated January 11, 2006, confirming that the contact information for Rolex USA had been changed to John Flaherty and Angelo Mazza of Gibney, Anthony & Flaherty, LLP ("Gibney"), who were legal counsel for Rolex USA with regard to any CBP matters from 2004 through at least 2015.

         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 no later than 2009 until 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 other Rolex entities, such that Rolex USA was under common ownership with Rolex Holdings, S.A., a foreign entity. At that point, Rolex USA 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. Rolex USA did so by requiring importers to obtain its 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 two shipments containing a total of 90 Rolex watches that Plaintiff sought to import from Hong Kong. The customs broker of record for the detained shipments was Karen Ferry. The same day, CBP officials contacted Rolex USA "via wire and/or mail." Counsel from Gibney confirmed that the watches were genuine, but advised that the shipments were not accompanied by authorization from Rolex USA, the trademark holder. Consequently, CBP seized the watches and sent Plaintiff written notice of its actions. Gibney also sent Plaintiff a letter advising him of the seizure and seeking additional information.

         On May 21, 2009, Brian Ferrante, a Special Agent with Immigration and Customs Enforcement, contacted either Flaherty or Mazza at Gibney, who confirmed that Plaintiff was not authorized to import Rolex watches and did not disclose that authorization was unnecessary. Also on May 21, Ferrante contacted Ferry, who provided "customs declarations, invoices and other documentation" showing that Plaintiff had imported at least six other shipments of watches since April 2009. As a result of these communications, a search warrant was sought for the purpose of finding and seizing more Rolex watches from Plaintiff.

         In 2015, Rolex USA changed its recordation with CBP to indicate that it is not entitled to gray market protection. Rolex USA also notified FedEx at some point during 2015 that it no longer wished to abide by the import restriction. Rolex USA's decision not to seek further gray market protection confirmed Plaintiff's 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.

         The SAC alleges that Rolex USA is a subsidiary of Rolex Industries, Inc., which in turn is a subsidiary of Rolex Holdings, SA. Montres Rolex, SA. is the sole worldwide distributor of Rolex watches. Rolex Holdings, SA. and Montres Rolex, SA. are Swiss corporations.

         II. STANDARD

         "Leave to amend should be 'freely give[n] . . . when justice so requires, ' Fed.R.Civ.P. 15(a)(2), but should generally be denied in instances of futility . . . ." United States ex rel. Ladas v. Exelis, Inc.,824 F.3d 16, 28 (2d Cir. 2016) (some internal quotation marks omitted). "A proposed amendment to a complaint is futile when it could not withstand a motion to dismiss." F5 Capital v. Pappas,856 F.3d 61, 89 (2d Cir. 2017). In reviewing such a motion, a court accepts as true all factual allegations and draws all reasonable inferences in the plaintiff's favor. See Trs. of Upstate N.Y. Eng'rs Pension Fund, 843 F.3d at 566. To withstand dismissal, a pleading "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible ...


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