Lord & Taylor Ecomm LLC v. Circle Business S.A.
1:23-cv-06315
S.D.N.Y.Apr 14, 2025Background
- Lord & Taylor EComm LLC (L&T) sued Circle Business S.A., a distributor, over the sale of counterfeit luxury goods (Gucci/Yves Saint Laurent) for L&T’s e-commerce store, after an expert found many items to be non-authentic.
- Between 2021 and 2022, L&T bought 7,557 items over 33 purchase orders from Circle, each accompanied by Declarations of Authenticity signed by Circle.
- After customer complaints and returns—primarily of Gucci and Yves Saint Laurent products—L&T commissioned a third-party expert, which confirmed large numbers of goods from Circle were counterfeit.
- L&T demanded damages and indemnification after being sued by Gucci for trademark infringement, with the underlying issue being Circle’s supply of allegedly fake goods.
- Defendants moved to dismiss the complaint in its entirety under Rule 12(b)(6); the court assessed if L&T’s amended pleadings and factual allegations were legally sufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Individual Liability (veil piercing) | Circle’s principals should be liable due to alleged misrepresentations | L&T did not plead facts showing control or wrongful conduct by individuals | Dismissed all claims against individuals |
| Breach of Contract/Express Warranty | Circle expressly warranted authenticity; damages from counterfeit goods | Plaintiff failed to provide timely notice; no sufficient factual link | Claim survives motion to dismiss |
| Fraud | Circle knowingly made false representations about authenticity | Fraud allegations are too conclusory; fail Rule 9(b) | Fraud claim survives against Circle |
| Tortious Interference w/ Business Relations | Circle’s conduct damaged L&T’s business relations (e.g., with Gucci) | No specific third-party relations or targeted action alleged | Dismissed for lack of specificity |
| Indemnification | L&T entitled due to Circle’s sale of counterfeits and resulting liability | L&T participated by reselling, defaulted in Gucci action | Dismissed for admitted participation |
| Loss of Reputation | L&T suffered harm to reputation due to Circle's conduct | Not a separate cognizable claim under NY law | Dismissed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Pleading standard for plausibility on a Rule 12(b)(6) motion)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Pleading standard for facial plausibility)
- Gartner v. Snyder, 607 F.2d 582 (Veil-piercing standard in Second Circuit)
- Thrift Drug, Inc. v. Universal Prescription Adm’rs, 131 F.3d 95 (Standards for corporate veil-piercing under New York law)
- Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553 (Standard for common law fraud in New York)
- Lombard v. Booz-Allen & Hamilton, Inc., 280 F.3d 209 (Elements for tortious interference with business relations under New York law)
- D’Ambrosio v. City of New York, 55 N.Y.2d 454 (Scope of common law indemnification where a party is compelled to pay for the wrong of another)
- Dillon v. City of New York, 704 N.Y.S.2d 1 (Elements for defamation claims in New York)