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The Diamond Collection, LLC v. Underwraps Costume Corp.

United States District Court, E.D. New York

July 21, 2017


          Meyer, Suozzi, English & Klein, P.C. Attorneys for the Plaintiff, By: Lynn Marcy Brown, Esq., Kevin Schlosser, Esq., Of Counsel.

          Law Office of Bryan A. McKenna Co-Counsel for the Defendant, By: Bryan A. McKenna, Esq., Of Counsel.

          Eisenberg Tanchum & Levy Co-Counsel for the Defendant, By: Stewart L. Levy, Esq., Of Counsel.


          ARTHUR D. SPATT United States District Judge.

         The Plaintiff the Diamond Collection, LLC (the “Plaintiff” or “Diamond”) brought this action against the Defendant Underwraps Costume Corporation (the “Defendant” or “Underwraps”), asking for a declaratory judgment that Diamond has not infringed on any of Underwraps' claimed intellectual property; and seeking damages for claims of unfair competition, tortious interference with prospective advantage, and commercial defamation per se.

         Presently before the Court is a motion by Underwraps to transfer this action to the Central District of California (the “CDCA”) pursuant to 28 U.S.C. § 1404(a) and forum non conveniens. For the following reasons, Underwraps' motion is denied.

         I. BACKGROUND

         A. The Relevant Facts

         The following facts are drawn from the first amended complaint (the “FAC”) as well as the exhibits attached to the parties' memoranda. See City of Pontiac Gen. Employees Ret. Sys. v. Dell Inc., No. 14-CV-3644 (VSB), 2015 WL 12659925, at *3 (S.D.N.Y. Apr. 30, 2015) (“In deciding a motion to transfer, a court may consider material outside of the pleadings.”); Everlast World's Boxing Headquarters Corp. v. Ringside, Inc., 928 F.Supp.2d 735, 737 n.1 (S.D.N.Y. 2013) (“[I]n deciding a motion to transfer venue, the Court may consider factual submissions, including declarations, by defendants, who have the burden to justify a change of venue.”).

         Diamond is a Delaware limited liability company with a principal place of business in Westbury, New York. Underwraps has its principal place of business in California. Underwraps has a showroom in New York, and does business in the state as well.

         Both parties design, market and sell Halloween costumes. The enmity between the parties emanates from one of Diamond's recent catalogs, as well as a trade show in New York attended by both parties in December 2016. Underwraps claims that Diamond has been copying Underwraps catalogs, and has been selling Underwraps' costumes, sometimes with the Underwraps label still attached.

         Although it is the Defendant in this action, Underwraps further claims that Diamond is not the true party in interest in this action. Underwraps states that its quarrel is with an entity called Pizazz. The parties disagree as to whether Pizazz is a subsidiary corporation or an unincorporated division of Diamond. The catalog at issue is titled “Pizazz! Party & Costumes, ” and at the bottom of the catalog's cover, Diamond's logo appears. The back of the catalog lists an email address and a California mailing address below Diamond's logo, and is featured prominently on the back cover. The Pizazz logo is on the bottom left; and at the bottom right the catalog notes that “Pizazz LLC is a division of the Diamond Corporation.” Diamond states that a “[a] simple check of the public Secretary of State business search records (in other words, basic due diligence) would have shown Defendant Underwraps' lawyer that The Diamond Collection, LLC is the legal entity and no ‘Pizazz LLC' exists.” (Pl.'s Mem. in Opp. at 4).

         In its FAC, Diamond states that “[t]he Diamond Catalog contained an editing error, erroneously identifying Pizazz as an ‘LLC.' [] [] Pizazz is a trade name, and it is not an LLC. This editing error was inadvertently missed in the production process, and has since been corrected.” (FAC ¶¶ 30-33). Oddly, even though Underwraps maintains that Pizazz is the true party in interest, Underwraps stated “Even though Pizazz's catalog states that Pizazz is an LLC, it is not an LLC or any other kind of company. It is merely a ‘DBA' of The Diamond Collection, which is why, presumably, The Diamond Collection has brought this action.” (Def.'s Mem. in Support at 4).

         On December 21, 2016, counsel for Underwraps sent a letter to “Pizazz LLC[, ] [a] Division of The Diamond Collection LLC.” (Pl.'s Ex. 1 to its FAC). In the letter, Underwraps' counsel claimed that Diamond was producing and selling costumes whose designs were exclusively owned by Underwraps through intellectual property rights, and directed Diamond to cease production and sales of the costumes. Counsel for Underwraps stated that “[w]hile Underwraps is not adverse to trying to resolve its myriad claims against Pizazz informally, please be assured that if it is unable to do so, Underwraps will immediately file an action in federal court seeking an injunction, damages, including its lost profits and actual damages and its attorneys['] fees.” (Id.).

         On January 5, 2017, Diamond filed the instant lawsuit. On January 13, 2017, Underwraps filed a complaint in the CDCA against Pizazz (the “California action”).

         Although it is unclear when, at some point after Underwraps filed the California action, the parties attended a New Orleans trade show. During that trade show, Underwraps purportedly told potential customers of Diamond that Underwraps had filed a lawsuit against Diamond for infringement and Diamond would be unable to fill orders.

         B. Relevant Procedural History

         On January 5, 2017, Diamond filed the complaint in the instant lawsuit. The initial complaint only sought a declaratory judgment stating that Diamond had not and is not infringing on Underwraps' claimed intellectual property rights. Underwraps was served with the summons and complaint on January 11, 2017.

         On January 13, 2017, two days after being served with the summons and complaint in the instant action, Underwraps filed a complaint in the CDCA against Pizazz. The full caption of the California action reads:


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