Rainbow Apparel Distribution Center Corp. v. Gaze U.S.A., Inc.
295 F.R.D. 18
E.D.N.Y2013Background
- Plaintiffs Rainbow Apparel Distribution Center Corp. and The New 5-7-9 and Beyond, Inc. are New Jersey/New York apparel distributors who purchased goods from defendant importer Gaze U.S.A., Inc.
- Gaze is a California corporation; its president and sole shareholder is Ji S. Hong, a California resident who traveled to New York periodically, signed contracts, and directed shipments to plaintiffs.
- Dispute centers on the URVANA trademark (registered by Hong) and whether plaintiffs had rights (actual or implied license, or priority of use) to resell URVANA‑marked garments after Gaze stopped shipping them.
- Plaintiffs seek declaratory relief (non-infringement, invalidity, ownership/cancellation of the URVANA mark or license) and breach of contract damages under a Markup Agreement that selected New York law and forum.
- Gaze moved to dismiss under Rule 12(b)(6); Hong moved to dismiss for lack of personal jurisdiction under Rule 12(b)(2). The court held limited discovery and an evidentiary hearing on jurisdiction.
- Court denied both motions: plaintiffs’ claims survived the 12(b)(6) plausibility standard; New York has specific jurisdiction over Hong under CPLR 302(a) on an agency theory and due process is satisfied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether declaratory trademark claims (ownership, invalidity, non-infringement, implied license) state a plausible claim | Plaintiffs allege prior/use-based rights and an actual or implied license arising from course of dealing with Gaze | Defendants say allegations are conclusory and plaintiffs must plead more (e.g., registration attempt or formal ownership) | Court: Plaintiffs pleaded sufficient factual allegations of prior use and implied/actual license to survive 12(b)(6) |
| Whether breach of contract claim is pleaded adequately | Plaintiffs attached the Markup Agreement and allege reimbursement owed under its terms | Defendants contend plaintiffs failed to plead the contract provisions in dispute or incorporate the contract | Court: Agreement was attached and incorporated; breach claim survives 12(b)(6) |
| Whether New York courts have personal jurisdiction over Hong under CPLR 302(a) (agency theory) | Gaze’s New York transactions (shipments, contracts) should be imputed to Hong because he directed and benefited from those transactions and licensed the URVANA mark to Gaze | Hong argues he is a nonresident and that ordinary corporate acts do not automatically make him subject to New York jurisdiction | Court: Prima facie agency shown (Hong personally involved, sole shareholder, owner of mark central to New York dealings); CPLR 302(a) satisfied |
| Whether exercising jurisdiction over Hong comports with Due Process | Plaintiffs: Hong had sufficient minimum contacts and it is reasonable for NY to adjudicate (forum chosen in contract; litigation centered in NY) | Hong: Litigation burden from litigating in NY (implicit) | Court: Minimum contacts and reasonableness met; interests of forum, plaintiff, and judicial efficiency favor NY jurisdiction |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (application of plausibility standard)
- Int'l Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (minimum contacts test for due process)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (purposeful availment and reasonableness factors)
- Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d Cir. 2010) (specific jurisdiction in trademark context)
- Kreutter v. McFadden Oil Co., 71 N.Y.2d 460 (N.Y. 1988) (agency test for imputing corporate contacts to an individual)
- Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779 (2d Cir. 1999) (totality-of-contacts analysis for transacting business)