Gucci America, Inc. v. Bank of China
768 F.3d 122
| 2d Cir. | 2014Background
- Luxury brands (Gucci, Balenciaga, Bottega Veneta, Yves Saint Laurent, et al.) sued alleged online counterfeiters and obtained a TRO (June 25, 2010) later converted to a preliminary Asset Freeze Injunction restraining defendants’ transfers of assets. Plaintiffs sought an accounting of defendants’ profits under the Lanham Act.
- Plaintiffs served Bank of China (BOC) in New York with the Asset Freeze Injunction and a broad Rule 45 subpoena (2010 Subpoena) seeking account records; BOC produced documents from its New York branch but refused to produce records or freeze accounts located in China, citing Chinese law.
- Plaintiffs served a second subpoena in 2011 identifying additional account numbers and later amended their complaint to add seven new defendants. The district court ordered BOC to comply with the 2010 Subpoena and to honor the Asset Freeze Injunction; BOC appealed and sought reconsideration.
- BOC presented a November 3, 2011 letter from Chinese banking regulators and expert declarations asserting Chinese law forbids freezing accounts or producing certain records in response to foreign orders; the district court denied reconsideration and later held BOC in civil contempt (Nov. 15, 2012) imposing fines and fees.
- The Second Circuit: (1) upheld that a court may issue a prejudgment asset freeze in Lanham Act/accounting-for-profits cases (Grupo Mexicano inapplicable), (2) vacated portions of the district court orders insofar as they compelled BOC’s compliance because Daimler limits general jurisdiction, remanding to permit the district court to consider specific jurisdiction and comity, and (3) reversed the contempt finding and monetary sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to issue prejudgment asset freeze | Asset freeze is proper because plaintiffs seek an accounting of profits (equitable relief under Lanham Act). | Grupo Mexicano bars pre-judgment asset freezes for mere legal money claims. | Held for plaintiffs: asset freeze permissible here as ancillary to equitable accounting; Grupo Mexicano inapplicable. |
| Personal jurisdiction to issue injunctive order (over defendants' assets) | Jurisdiction over defendants suffices to freeze assets under court control; no need to have jurisdiction over nonparty banks to issue the injunction. | BOC argued the district court lacked authority over BOC and thus could not order compliance. | Held: court could issue injunction against defendants without jurisdiction over BOC, but to compel BOC’s compliance the court must have personal jurisdiction over BOC. General jurisdiction was improper under Daimler; remanded to assess specific jurisdiction. |
| Comity and foreign-law conflict (ordering freeze/production that may conflict with Chinese law) | U.S. interest in enforcing Lanham Act and obtaining records/profits outweighs foreign objections. | BOC cited Chinese banking laws and regulators’ letter showing freezing/production could violate Chinese law and raise sovereign concerns. | Held: district court must perform a comity analysis (Restatement (Third) §403) on remand before ordering extraterritorial compliance if it finds specific jurisdiction. |
| Civil contempt and sanctions for failure to comply with 2010 Subpoena | Plaintiffs argued BOC disobeyed clear subpoena/Order by not producing records for newly named defendants. | BOC argued subpoena did not unambiguously cover accounts tied to defendants added later; compliance was constrained by Chinese law. | Held for BOC: contempt reversed because 2010 Subpoena and order did not clearly and unambiguously require production for the newly named defendants; monetary sanctions vacated as punitive and improper. |
Key Cases Cited
- Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999) (prejudgment asset freezes unavailable for ordinary legal claims for money damages absent equitable basis)
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (limits general jurisdiction: corporation subject to general jurisdiction only where "at home")
- United States v. First Nat’l City Bank, 379 U.S. 378 (1965) (court with jurisdiction over a party may freeze property under that party’s control, even if abroad)
- NML Capital, Ltd. v. Republic of Argentina, 727 F.3d 230 (2d Cir. 2013) (injunctions that bind nonparties acting "in active concert" do not require jurisdiction over those nonparties to issue the injunction)
- Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251 (1916) (equity tradition requires trademark infringer to account for and yield up profits)
- Deckert v. Independence Shares Corp., 311 U.S. 282 (1940) (distinguished in Grupo Mexicano as an example where equitable relief including accounting justified asset restraints)